Two reports released this week illustrate the continuing challenges state and local government policies pose for small businesses in Connecticut.

The first, the latest annual Small Business Friendliness Survey from the hiring and networking website Thumbtack.com, gave the state an 'F'.

Only Rhode Island and Illinois fared worse among all states. Texas and New Hampshire received the highest grades.

A year ago, Thumbtack ranked Connecticut 35th, grading the state's small business environment with a 'D.'

Employment drops

"I would have been surprised if the state had gotten a grade that was any higher," said CBIA economist Pete Gioia in response to the latest Thumbtack survey.

“I gave two speeches today and I had a few people come up to me and say that if they could move their businesses to another state they would."

The state performed little better in the latest Intuit QuickBooks’ Small Business Index, which reported that employment at Connecticut companies with fewer than 25 workers declined by .06 percent in July.

Most states added jobs for the month, with Idaho, Nevada, Minnesota and Alabama posting the largest gains.

Ten states posted declines, with the largest drops in Massachusetts, New York, Ohio, and Utah.

'Slippery slope'

Webster Bank economist Donald Klepper-Smith told the New Haven Register that having such a difficult climate for small businesses “puts Connecticut on a slippery slope.”

“Small businesses are the seed for Connecticut’s economy and we’ve failed to instill a level of confidence in them,” he said.

“You want to nurture these companies in their early stages and you want to create an environment that companies feel they can grow and invest.”

Thumbtack surveyed over 220 Connecticut small businesses, measuring their responses across a number of categories, including taxes, regulations, ease of starting a business, and employment, labor, and hiring.

Winners and losers

“Connecticut small businesses tell us the environment is extremely challenging for small business owners and that the state isn't offering enough support to navigate the difficult regulatory environment," said Thumbtack chief economist Jon Lieber.

Gioia called for a cohesive strategy focusing on making the business climate better for all companies, saying that would go a long way to changing overall attitudes.

“We’ve got to stop picking winners and losers,” he said.

“The smaller companies hear the unfortunate rhetoric that was directed at General Electric during the last budget cycle and say, ‘If that’s what they think of GE, how do they feel about me?’”