🔒CT Inc. voices no confidence in Malloy, legislature

The loud chorus of boos that echoed from the boardrooms of Connecticut's largest employers last week over tax increases proposed and then approved by state lawmakers wasn't public theater.

No, instead corporate Connecticut was voicing a vote of no confidence in Gov. Dannel P. Malloy and the state legislature, which approved a two-year, $40.3 billion budget last week that raises $2 billion in new tax revenues and will do further irreparable harm to the business climate. What little faith Connecticut businesses, both small and large, had in state government to be fiscally prudent is now in the rearview mirror.

Malloy, during his campaign last fall, pledged no new taxes. It's a promise he will clearly fail to keep if he signs the budget into law. Late last week, the governor left open the possibility that he could work with lawmakers to tweak some of the business taxes, but we aren't holding our breath.

The new normal, it appears, is that Connecticut Inc. should expect new and/or higher taxes every few years. Such uncertainty will throw a wet blanket over hiring and investment.

What's more alarming is the Malloy Administration's inconsistent, and oftentimes counterintuitive, economic development strategy, which includes giving hundreds of millions of dollars in grants, loans, and tax breaks to one, small group of businesses, and then soaking the rest of the state's employers with higher taxes. That's not a smart way to achieve long-term economic growth.

When major corporations like General Electric, Aetna, and Travelers, which openly voiced their opposition to several budget measures two days before they were passed by the legislature, are publicly threatening to relocate to other states, it signifies a major problem. Yes, such threats are made on a fairly routine basis, but never in such a public manner. These declarations reverberated in the national press, sending a message that Connecticut is not open for business. That doesn't bode well for short- or long-term investment in the state.

The root problem is many state legislators' failure to understand the significance of having a competitive business environment.

Some lawmakers equate profits with greed and are unflinching in their approach to enact policies that chip away at companies' bottom lines so they can fund an ever-growing state government apparatus.

Sadly, Malloy and the Democratic leaders in the legislature actually believe they helped businesses in this budget. The governor, for example, said the tax hikes will help pay for his ambitious 30-year, $100 billion transportation infrastructure overhaul, which will improve mobility around the state — something important to all businesses.

That may be true, but Malloy is loath to admit that the budget only commits for the next two years $65 million in new money to transportation investment, after the budget transferred $371 million typically earmarked for transportation to the general fund.

Meanwhile, Senate President Pro Tem Martin Looney, who said he was proud of the budget his chamber passed, defended lawmaker's adoption of the controversial unitary tax by arguing 25 other states have it and that Connecticut is simply following suit. Of course, the New Haven Democrat fails to recognize that Connecticut just lost one of the few remaining competitive advantages it has in its tax code.

This budget, which comes only four years after the legislature enacted the largest tax increase in state history, is bad for business. Malloy should know that. Looney and the rest of the legislature should know it. Corporate boardrooms across the state do know it, and they will react accordingly.

Lawmaker's tone-deaf attitude must stop. Unfortunately, it doesn't look like that will happen anytime soon.