General Assembly approves many pro-jobs initiatives; Provides good starting point for improving state’s economy

(May 5, 2006) Responding to widespread concerns about jobs and the economy, the General Assembly and Gov. Rell’s administration took significant, bipartisan steps this year to address Connecticut’s economic challenges and begin to set the stage for improved job growth in the state.

Policy-makers worked together to enact measures that will help reduce business costs, strengthen the state’s infrastructures and prepare more skilled workers — all goals of Connecticut’s business community.

Among the most important economy-boosting measures lawmakers enacted were:

• The phaseout of the property tax on manufacturing machinery and equipment
• The elimination of the 15% corporate tax surcharge in 2007
• A second major investment in transportation infrastructure and systems
  

These and other encouraging results send a positive message to the business community and provide a starting point for continued improvements to be made during the 2007 General Assembly.

CBIA applauds the efforts of legislative leadership and Gov. Rell’s administration for following through to propose and enact the measures.

And the association thanks the hundreds of CBIA members who participated in legislative outreach meetings and contacted their legislators about important issues.

Reducing business costs

Tax reform: One of the top priorities of the 2006 session was to eliminate one of the biggest competitive disadvantages for Connecticut manufacturers — the property tax on manufacturing machinery and equipment. SB-702, already signed by Gov. Rell, will phase out the tax over a five-year period and reimburse municipalities for lost revenue.

Another crucial step taken by legislators to reduce Connecticut’s high business costs was the elimination of the corporate tax surcharge for 2007, a provision contained in the budget bill, HB-5845. The action is expected to save Connecticut businesses $53.4 million.

The negotiated budget package includes some new business tax credits that were proposed by Gov. Rell. These include tax credits for companies that create at least 50 jobs or that hire laid-off workers. In addition, lawmakers approved a tax credit designed to encourage the growth of the film and television industry in the state.

Health care costs: One of the most serious challenges Connecticut employers face is affording the high cost of employee health care benefits. This year, legislators understood that health care coverage mandates drive up costs and appropriately refrained from adding new mandates.

Reducing debt: The $16.1 billion revised state budget for fiscal year 2007 uses this year’s anticipated $660 million surplus to address some of the state’s outstanding obligations and replenish its reserves, including:

• $246.5 million for the teachers’ retirement fund
• $136 million for the state’s Rainy Day Fund
• $85.5 million to pay off debt incurred in the 2003 budget crisis

Strengthening infrastructures

Transportation: For the second year in a row, the legislature approved a substantial measure to address the state’s serious transportation shortcomings and adopt the recommendations of the state’s Transportation Strategy Board.
HB-5844, “An Act Concerning The Roadmap For Connecticut’s Economic Future,” authorizes approximately $2.5 billion in new spending for the planning and implementation of a variety of statewide, multimodal transportation projects over 10 years.

The legislation, a compromise plan reached by lawmakers and the governor’s administration, implements the improvements without raising additional taxes or bringing back highway tolls. Together with last year’s $1.3 billion investment, the bill signals the advent of a new era of transportation development strategically tied to improving Connecticut’s economy.

Energy: This year there were many proposals that, while well intentioned, would have complicated Connecticut’s energy situation and increased energy costs at a time when Connecticut consumers are struggling to afford power for their homes, cars and businesses. CBIA appreciates the efforts of legislators who avoided moving these proposals forward.

Connecticut needs more electric-generation capacity; if lawmakers are able to reach an agreement on how best to accomplish that, the legislature should take action.

Economic development: Legislators also approved a measure that will encourage the redevelopment of brownfields in the state.

Preparing skilled workers

Education and job training: One of the biggest worries of Connecticut’s business community is the availability of skilled workers, both now and for the future. Lawmakers responded by making some improvements in education and workforce development efforts.

These include:

• Support for early childhood education
• New funding for charter schools — creating two new schools and enabling the state’s 14 existing schools to expand
• A loan-forgiveness program for engineering students and others in certain doctoral programs
• Programs to improve students’ proficiency in math and science, and to connect businesses with students and teachers
• Additional funding for apprenticeship training