What's the most important metric for measuring Connecticut's business climate?
Connecticut Mirror Capitol Bureau chief Mark Pazniokas posed the question to Governor Dannel Malloy, CBIA head Joe Brennan, and MetroHartford Alliance president and CEO Oz Griebel this week.
"If you look at Gross State Product, if you look at overall growth in the economy, I think that's really, really important," said Brennan. "You can't overlook job creation, either."
"Jobs are the end-all and the be-all," replied Griebel.
"I think any number of things go into it," said Malloy. "Some of these these [rankings] tend to be more subjective, representing the values that someone associates with being a good state for business."
Rankled by rankings
The three were debating the state's business climate at a CT20x17 campaign-sponsored policy forum in Bloomfield moderated by Pazniokas and hosted by the Mirror.
The topic: Connecticut’s fiscal situation and its impact on the business climate.
A few days earlier, Chief Executive magazine released its annual Best & Worst States for Business index, which saw Connecticut slip one place since last year—from 44th to 45th.
Citing CNBC’s 2014 America’s Top States for Business study, Brennan pointed out that the state ranked very low in economic performance.
"I hate to even say the words that CNBC says we're 46th [for overall business climate]," he said. "We all feel that Connecticut is a lot better than that.
"But we have to leverage our strengths--our workforce, our quality of life, our world-class companies, the great location--and acknowledge those areas where we're not strong, whether it's the cost of doing business, our transportation infrastructure, and others."
Malloy expressed skepticism about the reliability of national business climate rankings in general, referring to Connecticut’s high rank in many areas, including the overall health of our population and education.
“In 12th-grade reading, writing, and mathematics, we’re number one in the country,” he said.
“We’ve implemented some new standards quite effectively in holding ourselves responsible for even greater educational outcomes, particularly in our urban environments.
"On the other hand, we've got to do better at a lot of things. We didn't fall in these rankings overnight and you're not going to climb out of it overnight, although I believe we're effectively making progress by taking on things like the size of government and the growth of government."
Brennan noted that because Connecticut’s poor business climate rankings are consistent across numerous indexes, national rankings should not be ignored.
Chief Executive magazine based its latest Connecticut rankings, in part, to "poor road conditions and a high cost of living, [while] pro-growth forces are overwhelmed by the state’s commitment to higher taxes."
Discussion quickly turned to the $2.56 billion tax hike recently passed by the Finance Committee and the $1.5 billion in new spending approved by the Appropriations Committee.
“The key is creating more economic vitality, economic growth," Brennan said. "You can’t take tax money from one group and give it to another and expect to solve our [fiscal and economic] problems.
“I don’t think that we’re at the point where people understand that there are more alternatives than either raising taxes or cutting funding to families with disabled children. That’s a false choice.”
Griebel said that those actions “send a horrific signal to the private sector in terms of their confidence” in state government.
He suggested that “sending a strong signal that there are going to be structural changes in this budget is critical,” advocating for the adoption of the Connecticut Institute for the 21st Century’s sustainable spending recommendations.
Tax hikes a 'game-changer'
Brennan added that CBIA has been advancing a positive agenda, emphasizing Connecticut’s enormous economic potential, but the committees’ proposals “changed the game.”
He said that such a budget would make it extremely difficult for the business community to support the spending necessary to carry out the governor’s long-term plan to improve the state’s transportation infrastructure—a vital component of a healthy Connecticut economy.
“We’ve been supportive, but we have to ask how the state is going to be competitive if we have a huge tax increase and then have to pay for a major transportation upgrade,” he said.
Malloy said that the depth and reach of "at least one of the tax proposals that's out there is far more dangerous than anything I've proposed.".
“I predict we’re going to come out [of budget negotiations] better than it appears right now,” he said, arguing that the legislature has “no chance of getting their tax package passed.”