Governor Dannel Malloy's June 6 veto of a bill that helps address the state's growing shortage of skilled manufacturing workers sparked immediate calls for a legislative override.

CBIA and a number of business and manufacturing organizations called for lawmakers to overturn the veto of the measure, which expands the existing manufacturing apprenticeship tax credit to small businesses.

Manufacturing jobs bill: workforce needs
Source: CBIA's 2017 Survey of Connecticut Manufacturing Workforce Needs.

"This bill is about small business and jobs," CBIA president and CEO Joe Brennan said.

"The top concern Connecticut manufacturers face is finding skilled workers to fill thousands of well-paying positions.

"This measure helps smaller manufacturers train the employees they need to address the growing shortage of skilled workers in the state."

CBIA was joined by eight other organizations—the Aerospace Components Manufacturers, the Connecticut Tooling and Machining Association, the Eastern Advanced Manufacturing Alliance, the Metal Manufacturers Education and Training Alliance, the New England Spring and Metal Stamping Association, the New Haven Manufacturers Association, the Precision Machined Products Association, and the Smaller Manufacturers Association of Connecticut—in calling for the legislature to overturn the governor's veto of SB 261.

Long-Term Benefits

Malloy said he vetoed the bill—which both the state Senate and House passed unanimously—because it would result in a forecast $650,000 annual tax revenue loss.

"It would also allow owners of large, complex institutions to greatly reduce their personal income tax liability without limits, instead of providing benefits where they will create jobs—in small businesses," he wrote in his veto letter.

While Brennan acknowledged the governor's concerns about the state budget, he said the bill's long-term economic benefits outweigh the loss of tax revenue.

"We believe the best way to solve the state's fiscal issues is through economic growth and job creation," he said.

"Workforce challenges are suppressing that growth and this bill is part of the overall solution."

Workforce Challenges

CBIA senior counsel Eric Brown disagreed with the perception that the bill—which extends the existing tax credit to pass-through entities, including LLC, LLPs, and S corporations—benefits large companies.

"No one is getting a big windfall here," he said.

"In an environment where small businesses face a number of challenges, including high costs and finding skilled workers, this bill sends a signal that policymakers understand their needs and are listening to their concerns."

This bill sends a signal that policymakers understand the needs of small businesses and are listening to their concerns.
— CBIA's Eric Brown
Manufacturers say expanding the tax credit provides just a fraction—the lesser of $6 per hour, $7,500, or 50% of an apprentice's wages—of the overall investment small businesses need to train workers.

"We are an S-Corp with two registered apprentices and we would like to add more," said Martha Paluch Prou, director of administration and compliance with Enfield-based Phoenix Manufacturing.

"Training is expensive and access to the apprenticeship tax credit would be a big help to us."

Mitigating Costs, Risks

Hobson & Motzner, Inc. president Bruce Dworak also pointed to the shortage of skilled manufacturing workers—a 2017 CBIA survey showed Connecticut manufacturers must fill over 13,000 job positions this year to meet growing demand and offset retirements.

"It is a big commitment for a small business to take on the responsibility and expense of training apprentices," the Durham manufacturer said.

"SB 261 would help fill the manufacturing workforce pipeline by providing an incentive for small businesses to take on the risk and expense of making that large training investment."

Republican and Democratic legislative leaders have indicated their support for a veto override vote.

Overturning the governor's veto requires a two-thirds vote in both the 151-member state House and the 36-member state Senate.