Tax increases were kept at bay this year, but policymakers must be cognizant of other policies that may not read like a tax hike but nonetheless make it more expensive or difficult to do business in the state.
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With the 2021 legislative session officially complete, state lawmakers avoided major tax increases, much to the business community’s satisfaction.
In fact, the recently approved two-year, $46.4 billion spending plan even got some bipartisan support (with 22 House Republicans approving it) and the Connecticut Business & Industry Association applauded it, saying “there are numerous reasons to be optimistic about the state’s future based on the actions the legislature and the Lamont administration took over the last five-plus months … .”
Gov. Ned Lamont deserves credit for holding the line on tax increases, particularly in the face of his party’s left wing, which was pushing hard to raise additional revenue from the state’s wealthiest residents.
Could the state’s top earners afford to pay more? Sure they can but they also don’t have to, and Connecticut needs to do everything it can to prevent its wealthiest residents from moving to lower-tax states.
The threat of higher federal taxes will only increase the allure of low-tax jurisdictions.
Any legislative session in Connecticut that ends without tax hikes is certainly a victory, although attempts to raise new revenues this year were largely inexcusable with the state experiencing a budget surplus in addition to having a multibillion-dollar rainy day fund and billions more in federal stimulus aid.
Not to mention Connecticut legalized two new industries — recreational marijuana and sports betting — that will raise tens of millions of dollars in new revenues.
Beyond the tax debate, however, there were a few bills that passed that are concerning and underscore the state legislature’s increasing intrusion into the private sector.
In February the CT Mirror published an aptly headlined story that read: “In an evolving economy, lawmakers take roles once played by unions.”
It described a few bills that, in many ways, would impose union-like rules on non-unionized, private-sector companies.
One proposal — Senate Bill 658 — required employers to recall certain laid off workers in order of seniority.
Another proposal, not mentioned in the CT Mirror story, required developers of all renewable energy projects to pay employees the prevailing wage, something typically required in only public works projects.
The legislature passed both bills; Lamont signed the solar industry bill into law but had not yet acted on the employee call back measure as of press time.
This is not meant to be an anti-union column. Organized labor has its place in the economy, and employers with unionized workforces ought to negotiate wages, benefits and other perks in good faith.
And there are good intentions behind both bills, including trying to secure higher wages for employees and ensure older workers don’t get left behind as employers rehire in a post-pandemic world.
But it feels like a major overreach when government dictates to private sector companies things like a prevailing wage requirement or hiring restrictions that would traditionally be negotiated through collective bargaining.
Debates over tax policy often dominate the headlines during the legislative session, but a lot of important bills that impact businesses are raised and come out of the Labor and Public Employees Committee.
It’s a committee the Connecticut Business & Industry Association traditionally keeps close tabs on, CBIA CEO Chris DiPentima recently told me. In fact, the CBIA and more than 40 other employer organizations in April sent out a media advisory calling on lawmakers to reject about a dozen bills that would introduce new workplace mandates on private sector employers, including the seniority rehiring measure.
“Those types of things always get us concerned about Connecticut progressing to a more unionized environment in non-union companies,” DiPentima said. “There were a litany of labor mandates in the legislature, but luckily the vast majority, 99%, did not pass.”
Many of these so-called employer mandates come up on an annual basis and don’t get through the legislature, but it only takes the approval of one or two a year to create a more challenging business environment.
Tax increases were kept at bay this year, and that’s a good thing. But policymakers must be cognizant of other policies that may not read like a tax hike, but nonetheless make it more expensive or difficult to do business in the state.
