Budget Fixes Must Support Economic Growth

More spending cuts will reduce the need for proposed tax hikes

Governor Dannel P. Malloy’s budget proposal to trim state expenses and cut personnel costs provides a good foundation for the General Assembly to build upon.

But, it’s absolutely critical that the administration achieves its proposed $1 billion per year reduction in state employee compensation costs. It’s also imperative that the administration works with the state legislature to identify additional spending cuts to reduce the size and scope of the proposed $1.5 billion tax increase on residents and businesses in our state.

It’s about jobs

 “Solving our state’s fiscal crisis is essential to our economic recovery and restoring business confidence in Connecticut,” said John R. Rathgeber, CBIA’s president and CEO. “But, it must be done in a way that that makes our state more attractive to private-sector investments and job creation.”

Lawmakers should seriously consider what neighboring states are doing to reduce their budgets and limit tax increases. And they could adopt many of the cost-cutting reforms proposed by The Connecticut Regional Institute for the 21st Century dealing with state employee pension expenses, long-term care and prisons.

“With Connecticut employers already facing more than a $70 million hike in unemployment compensation taxes, it’s essential that the administration and the legislature minimize the need for higher taxes,” said Rathgeber.

Business impacts

In addition to extending the corporate income tax surcharge, the proposed $1.5 billion tax proposal impacts business through increases taxes on business income paid through the personal income tax, the sales tax, a throwback rule that hits in-state manufacturers, the premium tax on insurers, and a new tax on electricity generation.

CBIA is providing a more detailed look at the governor’s spending and tax proposals. What’s more, the governor will be traveling throughout the state over the next several weeks to promote his plan and answer questions from the public.

For more information about the budget, contact CBIA’s Bonnie Stewart at 860.244.1925 or bonnie.stewart@cbia.com.