🔒Bordonaro: Workforce development, tax/spending policies should be key focus areas in 2023

With midterm elections now in the rearview mirror, lawmakers will soon shift from campaign to legislating mode.

In Connecticut, the legislative session begins in less than two months. And it will be an important one, with many key issues, including coming up with a new two-year budget plan, on the docket.

The power structures within Hartford’s golden dome remain the same. Gov. Ned Lamont easily won reelection over GOP challenger Bob Stefanowski, while Democrats retained large majorities in the House and Senate.

The top issue on all lawmakers’ minds ought to be the economy, especially with the looming threat of a recession.

Lamont seems to get that. In a post-Election Day press conference, the Democratic governor said one of his top priorities will be encouraging “growth and opportunity.”

Part of that effort includes holding the line on taxes and spending, and continuing to pay down Connecticut’s unfunded pension liability, he said.

“I said probably 200 times, ‘I don’t want more taxes, but I don’t mind more taxpayers.’ And I hope everybody got my message on that,” Lamont said, according to the CT Mirror. “And when I say more taxpayers, that means growth and opportunity. Everything I do is gonna be looking through that lens of growth and opportunity.”

Two key focus areas for the business community this session will be workforce development and tax and spending policy. Both could have major impacts on Connecticut’s short- and long-term economic performance, which has been uneven over the past year.

Workforce development

Perhaps the biggest potential economic unlock would be addressing the state’s labor shortage.

This is a national issue, but with in-state employers reporting 114,000 open jobs at the end of August, it appears to be more acute in Connecticut.

A Connecticut Business & Industry Association (CBIA) survey released in October found that 87% of manufacturers are having difficulty finding and retaining workers.

There are no silver-bullet solutions, but some legislative changes could make a difference. For example, the CBIA has unsuccessfully lobbied for exempting workforce training programs from the state sales and use tax.

CBIA President and CEO Chris DiPentima said a big focus for the business group in 2023 will be advocating for policies that retain and attract people to Connecticut. He said the state’s lackluster population growth over the past decade (0.9% from 2008 to 2020) is the root cause behind “our inability to fill the 114,000 job openings.”

A few of CBIA’s policy proposals will include:

• Creating incentives for employers to provide workers with loan or tuition reimbursement, in an effort to keep more young talent in the state.

• Establishing incentives for developers and municipalities to build workforce housing on former brownfield sites and in opportunity zones to help ease the affordable housing crunch.

• Making it easier for licensed professionals in other states to relocate to Connecticut by reducing the number of years for transferability of out-of-state occupational licenses from three years to one year.

The Lamont administration has made workforce development a top priority, even establishing the Office of Workforce Strategy and a chief workforce officer position, currently held by Kelli-Marie Vallieres.

However, just as important as any new policies, is holding accountable programs currently in place. The state already spends tens of millions of dollars on various workforce initiatives. Are they effective? Are we getting a proper return on investment?

Lawmakers’ need to play an effective oversight role and be willing to redirect money if necessary.

Taxes and spending

Connecticut remains in a stable fiscal position, probably one of the key contributing factors in Lamont’s decisive Nov. 8 electoral victory.

A new report earlier this month by state budget analysts said the current fiscal year’s estimated surplus continues to rise to $2.8 billion. Last fiscal year, the state recorded a record-breaking $4.3 billion surplus, most of which was used to pay down Connecticut’s massive unfunded pension liability.

The rest went into Connecticut’s $3.3 billion rainy day fund.

All that black ink should keep state finances stable through 2025, the report said.

Lamont has been prudent in not exorbitantly spending surplus dollars. He and the Democratic legislature did approve a $650-million tax relief package last session, but much of the state’s leftovers have been parked into savings or used to pay down long-term debt obligations.

Stefanowski and Republican lawmakers have argued that state government shouldn’t be sitting on such sizable reserves, especially at a time when inflation, rising interest rates and high gas prices are pressuring small to midsize businesses and residents.

They’ve suggested more aggressive tax-cutting, including using surplus dollars to pay down the state’s unemployment trust fund debt, which was accumulated during the height of the pandemic to pay out a significant rise in jobless claims.

That debt needs to be repaid by businesses, and I think it would be good policy to extinguish it. There is also pressure to extend the state’s gas tax holiday beyond its Dec. 1 expiration date. That will likely happen.

Lamont will be challenged from the right and left on how to use surplus funds. Overall, I think he’s made the right decisions on fiscal issues.

Maintaining long-term fiscal stability — a key focus area for business decision makers — should be a top priority.