🔒Bordonaro: Regulatory reform must be a priority for CT Democrats

During a news conference earlier this month at a union headquarters in New Haven, Gov. Ned Lamont urged state lawmakers to support a bill that creates new regulations on the state’s warehouse industry.

The Democratic governor’s proposal, which has already passed out of the Labor and Public Employees Committee, sets rules around workplace production quotas to ensure, according to Lamont, that workers know how their performance is measured.

Under the legislation, workers must be given the opportunity to review current and historical work speed data, and be informed of changes in quotas. The bill also creates record-keeping mandates for warehouse employers.

A handful of other states — California, Minnesota, New York and Washington — have similar laws in place.

The legislation has the support of labor unions. Opponents — including the Connecticut Business & Industry Association and a retail industry lobbying group — say the bill could deter businesses from locating facilities in the state because it creates a one-size-fits-all regulatory approach that doesn’t take into account the regularly changing duties of warehouse workers.

Are the new protections necessary?

I’ll let those more familiar with the issue argue that point. What can’t be denied is that Lamont’s proposal will create new regulatory burdens for companies operating in the state. That will make Connecticut less competitive, and it speaks to a broader issue of the state’s regulatory environment, which many private-sector interests have long complained is overburdensome.

There’s data to back up that claim. For example, CNBC’s 2024 Top States for Business assessment ranked Connecticut 39th in the country for business friendliness.

Many clear-minded thinkers, including myself, believe President Trump’s on-again, off-again trade war has created self-inflicted harm to the economy. The same can be said for Connecticut Democrats’ penchant to overregulate.

I’m not arguing lawmakers should repeal the state’s Clean Water Act and allow companies to freely dump toxins into our waterways.

But there are burdensome and unnecessary barriers to investment that can be lifted or reformed, especially around local and state permitting.

I’m not the only one to recently make this point. There’s an interesting new book out — titled “Abundance” — that discusses how overregulation, particularly in blue cities and states, has stymied development, including ambitious public-private projects related to housing, infrastructure and climate change.

It’s a must-read for Connecticut Democratic policymakers.

And the authors aren’t your run-of-the-mill, anti-regulation conservatives. They are liberal thinkers: New York Times columnist Ezra Klein and Derek Thompson, a staff writer at The Atlantic.

Their book takes a critical look at government-backed and private-sector initiatives — like California’s long-stalled efforts to build high-speed rail and new housing and clean energy projects — that have been stymied by complex regulations, extensive environmental reviews, stringent zoning regulations and other procedural red tape.

The authors also discuss how certain labor mandates, such as the adherence to prevailing wage requirements, can increase the costs and even deter large-scale development projects that are supposed to achieve a public good.

In one particularly intriguing example, Klein, in a recent podcast interview, described how complex regulations and procedural delays stalled the Biden administration’s $42.5 billion investment in rural broadband deployment.

The funding was approved as part of the 2021 Infrastructure Investment and Jobs Act and promised to expand broadband access to millions of Americans. However, by the end of 2024, the initiative had connected zero individuals to broadband services due to myriad procedural and other delays.

It’s a remarkable failure of governance.

Cutting red tape

In Connecticut, there are similar examples of regulatory malaise, including efforts to reform the state’s cumbersome law governing the sale of potentially contaminated properties.

The Transfer Act, first adopted in 1985, has long been a thorn in the side of the development community and has been blamed for costing the state thousands of manufacturer jobs and hundreds of millions of dollars in state and local tax revenues over the years.

The biggest complaint against the Transfer Act is the wide net it casts, dragging in all properties in which more than 100 kilograms (about 220 pounds) of hazardous waste was processed or generated in any one month from Nov. 19, 1980 onward.

Under the law, those properties — even ones where there was never any known discharge or spill — have to undergo environmental testing and review before a sale can be completed.

At a minimum, a property owner typically spends about $50,000 for an environmental review, which has had a roughly 50% chance of being audited by the state, meaning further cost and delay, experts have said.

Commercial real estate brokers have often referred to the Transfer Act, which is only used by one other state (New Jersey), as a deal killer.

State lawmakers finally saw the light in 2020 and passed a law to phase out the Transfer Act and replace it with a new, less burdensome release-based system.

It’s now five years later and that new system is still not in place. The state Department of Energy and Environmental Protection (DEEP) in January released its final version of the new release-based regulations, with the goal of having them go into effect next spring.

In the meantime, think of all the lost development opportunities Connecticut has faced in the last few years, never mind the last four decades.

To be fair to DEEP, the agency has its hands full. Commissioner Katie Dykes recently wrote in testimony to legislators that her agency is responsible for over 125 different state and federally-delegated permitting and environmental review processes, and annually receives roughly 2,000 permit applications, which she described as “incredible volume.”

In another example, the Hartford Business Journal reported last year about how a prevailing wage requirement attached to state incentives was creating challenges for developers looking to build affordable housing.

A 2017 law adopted by the state legislature requires prevailing wages for laborers on private construction projects that are supported with $1 million or more in financial assistance from the state Department of Economic and Community Development. Developers, on and off the record, told the HBJ the requirement, amid rising interest rates and construction costs, was making it harder for affordable housing projects to pencil out, creating a roadblock to Gov. Ned Lamont’s and lawmakers’ efforts to address the state’s housing shortage.

Some bright spots

Despite those issues, there are examples of Democratic policymakers improving the regulatory environment.

Hartford Mayor Arunan Arulampalam in January announced his administration between 2023 and 2024 had cut the average wait time for a building permit by 57%, from 40 days to 17 days. That’s the type of small step that can give the private sector more confidence to invest in the Capital City.

Even DEEP is trying to speed up its processes. It launched an effort last year — called the 20BY26 Initiative — that aims to improve the transparency, predictability and speed of its permitting processes.

A bill in the legislature that would codify some of those improvements has bipartisan support, including from the CBIA.

That’s a start, but there’s plenty of more work to be done at the state and local levels.

Connecticut’s economic future depends on it.