Despite positive gains from regulation reform and the adoption of new industry incentives, Connecticut’s business advocates say the General Assembly’s 2014 legislative session didn’t do enough to help the state’s economic competitiveness.
An increase in the state’s minimum wage to $10.10 per hour by 2017 and a looming $1.4 billion deficit overshadowed pro-business legislation that will rein in workers’ compensation costs and allow United Technologies Corp. to build out infrastructure in Connecticut using research and development tax credits.
“The No. 1 concern of small businesses right now is economic uncertainty, and there was very little done this session to address that,” said Andrew Markowski, Connecticut state director for the National Federation of Independent Business.
The Connecticut Business & Industry Association this session launched a new marketing initiative that called for Connecticut to be one of the top 20 states to do business by 2017. Joe Brennan, CBIA’s senior vice president of public policy, said this session did not put the state on track to meet that goal.
“There were some positive bills that passed this session, but we weren’t as aggressive as we need to be to achieve that economic competitiveness we need,” Brennan said.
Among the helpful bits of legislation passed was the creation of a statewide port authority, which has been developed to determine the best ways to take advantage of Connecticut’s three deepwater ports in New Haven, New London and Bridgeport, said Brennan. That will help the state’s rankings because Connecticut usually ranks near the bottom for transportation infrastructure.
Changes to workers’ compensation laws will help keep costs in check for companies by preventing hospital bills during workers’ comp cases from escalating, Brennan said. The legislation gives the chairman of the Connecticut Workers’ Compensation Commission authority to set a fee schedule for hospital charges in workers’ comp cases, so all parties know the costs in advance and to prevent hospitals from charging more.
The state’s $19 billion budget, which mysteriously found $75 million in miscellaneous unclaimed tax money to plug a funding gap, does have some positives for the business community, Brennan said. It, for example, funds a new study that will scrutinize the state’s entire tax system so it might be reworked in 2016 to best meet the state’s goals for economic competitiveness and funding priorities.
“We are going to use that as a way to move Connecticut up in the rankings as a good place to do business,” Brennan said.
That budget bill, though, still creates an environment of economic uncertainty, Markowski said, because of the way it was balanced. Even though it came out even this year, the budget proposal and revenue shortfalls create a projected $1.4 billion deficit in fiscal 2016.
“Small businesses are fearful of deficits because we know they lead to a need for more revenue, and that burden tends to fall to small businesses,” Markowski said.
Connecticut being the first state to answer President Barack Obama’s call for a $10.10 minimum wage also hurt business’ ability to remain competitive in the global marketplace, Markowski said. The wage gradually increases until hitting $10.10 in 2017.
“From the small business owner perspective, that is the wrong conversation to be having,” Markowski said. “The conversation really needs to be, ‘How can government create an environment where small businesses thrive?’”
The legislature did take a positive step forward in passing a bill that eliminated more than 1,000 pages of state regulations that were either redundant or outdated, Markowski said.
Another positive step was a $30 million Manufacturing Innovation Fund to provide incentives for advanced manufacturing and job training, Brennan said. That came on top of a $100 million bond package for the Manufacturing Assistance Act to help companies buy equipment and make other improvements.
In total, the legislature approved a $953 million bonding package that should help the construction industry because it supports new school construction and water improvement projects. The bonding also provides students with free courses at the state’s 17 colleges and universities under the Transform CSCU 2020 initiative.
Gov. Dannel P. Malloy also got his Go Back to Get Ahead legislative funding passed, which provides up to three free courses for residents to finish partially complete degree programs at a state college.
Brennan said all these little things do add up to make Connecticut more economically competitive, but Connecticut still is making big moves like raising the minimum wage and not getting its fiscal house in order, which sends a more sweeping message to the business community.
“A lot of these things are incremental,” Brennan said. “There was no one big thing that passed that helped business.”
