Job Creation, Budget Reform Top Governor’s Proposals

Issues & Policies

Gov. Rell this week proposed changes to Connecticut’s state budget to address the projected $500 million deficit for this fiscal year, recharge job growth, and lay the groundwork for a more affordable, more efficient state government in the long term.   

With the deficit climbing, state tax revenues declining and joblessness increasing, the governor said this year’s General Assembly must focus on just two issues: creating jobs and balancing the budget. “We need to get to work to put the people of Connecticut back to work,” she said in her State of the State address.  

Her $18.9 billion budget revision has no increases in taxes or fees. It includes the introduction of a new Keno game to raise revenues and it relies on federal stimulus dollars and shifts bond authorization dollars to fund incentives for small businesses.    

Recognizing that small businesses are the state’s main engine for job growth, the governor proposed help for small and midsize companies by expanding credit availability and creating a three-year tax credit for new jobs.

The Connecticut Credit Consortium will be a $500 million dollar partnership between the state and Connecticut banks to break a credit logjam and spur job creation. The state’s $100 million investment (from unused bond authorizations) will, according to Gov. Rell, “leverage at least $400 million” from state banks and provide $75 million in loan guarantees and $25 million in direct loans.  

The governor also proposed a three-year, $2,500 tax credit per year for the creation of each new net job in businesses of up to 25 employees.   

To give emerging industries a boost, the governor called for expanding the state’s sales tax exemption to include machines, equipment and other materials, supplies, and fuels used in the renewable energy and green technology fields.   

“We are pleased that there are incentives to help businesses create jobs, but it’s only a beginning,” says John Rathgeber, CBIA president and CEO. “Legislators must make reducing the size of government to eliminate the budget deficit their top priority. The deficit is the biggest impediment to investment and job creation in Connecticut.”

Streamlining government With the state facing chronic budget problems and a mountain of long-term funding liabilities, the governor said lawmakers need to acknowledge that “higher taxes are not the solution to our problems.” She proposed two initiatives to get the state back on sounder financial footing.  

A new Government for the 21st Century Commission would conduct a “top to bottom” review of state government this year and recommend ways to root out waste and cut the size and cost of state government.   

Modeled after the federal government’s Defense Base Closure and Realignment (BRAC) Commission, the group will include members of each branch of state government and make recommendations by the end of 2010 to be presented to the legislature for a straight up-and-down vote.   

To tackle Connecticut’s “financial Sword of Damocles” — unfunded pension liabilities of $9.3 billion and obligations for healthcare benefits for retired state employees of $24.6 billion —the governor is creating through executive order a working group to explore solutions. Representatives from the treasurer’s and comptroller’s offices, and other state agencies will propose short- and long-term plans for addressing the liabilities, with a first report due by July 1.    

Businesspeople understand that unless our legislature addresses the state’s fiscal challenges now, they will grow and lead to a new round of tax increases on our businesses and citizens.  In addition, the governor’s budget revision:

  • Increases the governor’s authority to cut state spending if the deficit balloons to more than 3% of the size of the budget. (The governor can now cut up to 5% of appropriated funds. If the deficit moves to between 3% and 5% of the budget, her rescission authority would be increased to 10% of appropriated funds.)
  • Sets up contributions to the state’s Rainy Day Fund throughout the year as surplus funds become available.
  • Provides a loan forgiveness program for state graduates with degrees or certificates in green technology, renewable energy, life sciences or health information technology.
  • Prohibits the state from creating any additional unfunded municipal mandates without a two-thirds vote of the General Assembly.
  • Creates a $10 million Municipal Capital Assistance Fund to help cities and towns purchase capital equipment ranging from data processing tools to trucks.

“Legislators must take steps this year and in the future to create fiscal policies that move the state in the right direction, welcoming businesses and creating jobs,” says Rathgeber. “Our future depends on it.”         

For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or


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