Lawmakers Must Give Businesses Reasons to Invest in State

Issues & Policies

In the 2018 General Assembly session, state lawmakers must give the business community a reason to believe—and invest—in Connecticut, CBIA economist Pete Gioia told lawmakers Feb. 20.
The way to do that, Gioia testified before the legislature’s Appropriations Committee, is to get Connecticut’s fiscal house in order.

Connecticut budget impacts job growth

Fiscal instability negatively impacts Connecticut’s job growth, which continues to trail the region and the country.

“The most critical thing the legislature can do to improve our economy is to restore confidence in business leaders and ordinary citizens that the state can sustainably manage its fiscal operations for the foreseeable future,” Gioia said.
“This confidence is critical to the job growth Connecticut needs.”
Gioia testified on HB 5035, which implements Governor Dannel Malloy’s fiscal 2018-2019 budget revision recommendations.
Although Connecticut has struggled to recover jobs lost in the 2008-2010 recession, Gioia said—based on preliminary reports—the state added 7,700 new jobs last year after losing 200 the previous year.
“I’m pleased to report that 2017 saw growth in Connecticut jobs, fueled by the manufacturing sector,” he said.
“Connecticut businesses and their workforces are relying on you to provide Connecticut’s employers the confidence in the state’s fiscal direction they need to sustain and grow these jobs.”
Doing that will enable employers to fill thousands of openings in well-paying manufacturing, energy, and other sectors, Gioia said.

Generating Economic Growth

That, in turn, will generate economic growth and increase the prosperity of all state residents.
“And more workers will result in more tax revenue for the state,” he said.
But the only way business owners can invest in their businesses and Connecticut with confidence is by knowing that state budgets will be predictable and stable.
That’s an area where lawmakers have work to do, he said.
It’s why CBIA is urging lawmakers to continue the bipartisan progress and fiscal reforms that were highlights of last year’s budget—particularly in identifying and achieving more structural savings.

The only way business owners can invest in their businesses and Connecticut with confidence is by knowing that state budgets will be predictable and stable.

"This is important because we are quite concerned that the additional cuts to municipalities may lead to property tax increases for companies," Gioia said.
Gioia told lawmakers that he speaks to dozens of groups across the state and always tells them that he believes in Connecticut's enormous economic potential.
"I am even more confident regarding Connecticut's economic prospects and our likelihood to build upon gains in financial services and manufacturing success in defense and aerospace."
To build and maintain that confidence, lawmakers must build on last year's budget, which had no broad-based tax hikes.
"Only a strong economy and confidence by business decisions makers in our government can provide the jobs people need and the revenues necessary to underwrite essential state services now and in the future," Gioia said.

More Reforms Needed

But that can only happen, he said, if Connecticut government becomes far more efficient.

Connecticut budget outlook

Connecticut faces ballooning budget deficits in the coming years.

He called for lawmakers to find additional cost savings, less expensive ways to deliver state services, and grow on these positives from the last budget:

  • Maintain reforms passed in the October bipartisan budget
  • Keep the budget under the spending cap
  • Use more community nonprofit providers to deliver more services at lower costs and higher quality
  • Support long term and comprehensive transportation infrastructure needs employing the most cost-effective options
  • Reduce insurance industry assessments
  • Grow the state's Rainy Day Fund
  • Continue prison reforms begun with the Second Chance initiatives

Avoid Tax Hikes

At the same time, Connecticut must avoid the new taxes and fees that HB 5035 imposes on businesses, including:

  • Revoking the sunset of the corporate tax surcharge, and setting it at 8%
  • Eliminating the $2.5 million unitary tax cap for non-manufacturers
  • Installing sundry other tax and fee increases
  • Increasing employer taxes to pay for salaries and benefits of state Department of Labor employees
  • Cutting credit for STEM graduates who we need to keep in Connecticut.
  • Cutting home care when we need to expand it in lieu of institutional care to save money and deliver greater quality services
  • Raising gas taxes, instituting tolls, and creating a new fee for tires

Connecticut needs a reliable transportation infrastructure—and the confidence that taxes and fees collected for this purpose are dedicated to transportation projects.
Lawmakers should not support new transportation revenue proposals until knowing exactly what it will entail and the expected return on investment.
Gioia reminded lawmakers to make the hard decisions that will ensure the budget "is used as a tool to help create future economic growth that will lead to more jobs and job opportunity, more wealth and security for our citizens."

For more information, contact CBIA's Pete Gioia (860.244.1945) | @CTEconomist


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