Officials with two of the state’s largest business organizations say the 2026 legislative session delivered a mixed bag for Connecticut employers, with a combination of policy wins, missed opportunities and measures they say could hinder economic growth.
Chris Davis, vice president of public policy for the Connecticut Business & Industry Association, and Andrew Markowski, state director for the National Federation of Independent Business, both described the session — which ends at midnight Wednesday — as uneven in its impact on the state’s business climate.
“It appears that, in every major policy area, the legislature took one step forward, but then sort of three steps back,” Davis said, adding that lawmakers “really put us in a situation where electoral politics was chosen over good policy that will drive economic growth.”
He was referring to the short session taking place in an election year, with lawmakers facing a key vote in November.
Markowski offered a similar assessment.
“Overall, I would say it’s a session that was not terrible, but there were a lot of missed opportunities,” he said.
The ‘ugly’
Both groups pointed to an omnibus bill passed early in the session as their biggest concern.
The legislation (Senate Bill 298), approved through an emergency certification process, includes provisions aimed at protecting warehouse workers from quotas — placing new limits on productivity quotas and requiring employers to disclose them to workers — a move business groups say could discourage investment.
The U.S. Chamber of Commerce has said the measure makes Connecticut “the worst state” for warehouses.
“Connecticut was a leader in transportation and distribution logistics,” Davis said. “It was the fastest-growing part of our economy, according to our own Department of Labor. And then we pass a bill like that,” with what he described as “heavy-handed, first-in-the-nation restrictions” that CBIA and others believe will discourage future investment here.
Davis also criticized the process used to pass the bill, saying it lacked sufficient public input and would have an immediate economic impact.
Markowski agreed the measure contained problematic provisions, but added it could have been worse. He noted some other proposed labor mandates — including requirements for advance work schedules and unemployment benefits for striking workers — did not pass.
The ‘bad’
Davis said House Bill 5003, a workforce bill, includes provisions that would increase the cost of doing business in the state, including holding general contractors responsible for unpaid wages by subcontractors and requiring certain service workers to be retained for 90 days after a contract changes hands.
He also raised concerns about a budget provision requiring the Office of Policy and Management to develop a plan for a potential surcharge on businesses that generate gains from technology investments.
The so-called “productivity surcharge” is a “terrible signal to the business community that Connecticut is not potentially a place to make those types of investments,” Davis said.
The state budget — approved over the weekend at $28.1 billion — also drew concern, particularly changes to Connecticut’s fiscal guardrails.
Those rules are designed to limit spending growth and require excess revenue to be saved or to pay down debt, but lawmakers approved exceptions to allow for additional spending in the new budget.
Those changes “really sets us up for potential fiscal instability in the out years,” Davis said, describing them as “several steps back on fiscal stability in the future … in order to try to spend more now.”
Markowski said uncertainty around the state’s finances weighs heavily on small businesses.
“Budgets keep small business owners up at night,” he said. “One of the things they are looking at is what does the state budget picture look like? They want to make sure that we continue to adhere to sound budgeting policies so that we do not see tax increases in the future.”
Both groups also pointed to what lawmakers did not accomplish, particularly around affordability.
A proposal to exempt electricity and natural gas from the state sales tax for small businesses stalled and is not expected to pass.
“That would have provided real savings in their pockets, on a cost driver that’s not optional for them,” Markowski said.
A separate proposal to allow small businesses and nonprofits to pool employees to obtain lower-cost health insurance also failed again this session.
The ‘good’
Despite the concerns, both organizations pointed to several policy wins.
Markowski highlighted a new tax credit for small businesses that reimburse employees for purchasing health insurance through Individual Coverage Health Reimbursement Arrangements, or ICHRAs. The credit, included in the budget, allows employers with fewer than 50 workers to receive up to $1,000 per employee annually.
Markowski said the NFIB in Connecticut, which represents several thousand small businesses across a range of industries, typically with 15 or fewer employees, supported the tax credit.
Davis said a key victory for CBIA was extending the state’s research and development tax credit to pass-through entities.
“Offering pass-through entities access to R&D tax credits was a big victory for CBIA and our small business manufacturers that have been for years unable to compete on a level playing field with larger corporations,” Davis said.
Other positives included permitting reforms at the Department of Energy and Environmental Protection, along with workforce-related initiatives aimed at expanding career and technical education opportunities.
The budget also allocates funding for a new technical school in Windham County and $50 million for Vinal Technical High School in Middletown.
“So we’re seeing some improvements there and the ability to enhance the workforce pipeline,” Davis said.
Ultimately, Markowski said, businesses in the state want policies from the legislature that promote Connecticut as a place that is hospitable to businesses, and especially small businesses.
“But, as always, the devil’s in the details,” he said. “The mere proposal or discussion of legislation sometimes is enough to keep small business owners up at night.”
