Member survey finds continuing loss ofconfidence in Connecticut

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Member survey finds continuing loss of confidence in state government

Taxes and health costs are biggest issues

Every fall, CBIA surveys association members about their opinions on public policy issues affecting Connecticut businesses as well as their feelings about doing business in Connecticut. The results help guide CBIA’s lobbying efforts at the state Capitol and regulatory agencies. Here are the key findings of this year’s survey.

Crumbling confidence: The percentage of executives who are somewhat or highly confident that state government will make decisions that will improve our business climate has sunk to just 29%, compared with 43% last year and 68% two years ago. And the percentage expressing little or no confidence in state government has surged to 71%, up from 57% in 2002 and 32% in 2001.

Connecticut less likely as expansion locale: Fewer businesses (53%, versus 60% last year and 68% in 2001) would choose Connecticut as a location if they were to expand their business.

Taxes and other costs top list of problems: The biggest problem facing Connecticut businesses are taxes (according to 27% of respondents), the cost of doing business in Connecticut (cited by 24%) and health care costs (12%).

Corporate income and property taxes are most harmful: The taxes having the biggest effect on business growth, especially for manufacturers, are the corporate income tax (named by 24%), property taxes on business machinery and equipment (23%), and property taxes on buildings and real estate (23%).

Future tax hikes would hurt companies and employees: If the state increased taxes again, 73% of respondents said they would be forced to give smaller wage increases or reduce employee benefits, 65% said it would make their businesses less competitive, and 51% said it would discourage them from hiring more workers. Most (83%) said the state must do more to control spending to avoid tax increases.

Reducing workplace costs would encourage expansion here: That action was named by 48% as the single best thing Connecticut could do to encourage businesses to expand in this state. Other high-priority actions are reducing business taxes (cited by 24%) and improving the state’s transportation infrastructure (11%).

Much angst about health benefit costs: More than half of the respondents (55%) said these are their top business-cost concern. Rising health care costs are an important factor in company hiring decisions, said 86%, and in decisions about company expansion or relocation plans, said 82%. Nearly all employers surveyed (93%) have experienced a double-digit rise in health benefit costs over the past year, and 92% expect costs to increase again next year. Despite rising costs, most still provide health benefits. But 56% of respondents said their employees are now paying a greater share of their health benefit costs, although employers continue to pay the majority of the costs. In order to pay for the higher costs, 28% said they experienced a loss in profits, 3% reduced their workforce, and less than 1% eliminated employee health care coverage. As costs continue to increase, 65% said they will have to increase their employees’ share of the costs, 29% will take a cut in profits, 2% will reduce their workforce, and 2% will drop health care coverage.

Rising workers’ comp costs hamper hiring: For 40% of the respondents, workers’ compensation costs are the most important factor in their decisions to hire additional workers. The majority (84%) would oppose any legislation that would increase these costs.

State has some assets: The chief advantages of doing business in Connecticut are the state’s location between New York and Boston (according to 39% of respondents) and the availability of skilled workers (cited by 28% of respondents overall). Among manufacturers, the skilled workforce was named as the state’s top asset.

Editor’s note: Click here for the complete survey results.