As we head into another state legislative session both Democrats and Republicans will be unveiling new proposals that aim to grow jobs and make Connecticut more business friendly.
Since 2009, when the recession hit Connecticut particularly hard, legislators have all sung the common chorus of needing to make the state more economically competitive. The results so far haven’t been all that impressive.
Connecticut’s economy has recovered at a snail’s pace; the state has gained back only half of the 121,000 jobs lost during the Great Recession. Yes, national and international forces drive much of the state’s economy, but Connecticut’s recovery has even lagged most other New England states: only Rhode Island has a higher unemployment rate than the Nutmeg State.
Politicians, including Gov. Dannel P. Malloy, have offered up many so-called pro-business policies in recent years, but few have moved the job creation dial significantly.
To be fair, Malloy deserves some credit. The state’s unemployment rate (7.6 percent) is lower today than when he took office in 2011. He’s made strategic investments in bioscience and STEM programs, and his natural gas push could eventually lower energy costs.
Still, there’s plenty more to be done. Effective legislative proposals must attack the state’s high cost of doing business. That is, at its core, a primary driver of the state’s anti-business reputation.
Does that mean across-the-board cuts to corporate and business and personal income taxes? No, although rolling back income tax levels to pre-2011 levels wouldn’t be the worst idea. One point often overlooked by lawmakers is that many small business owners file their taxes as individuals. The higher rates passed by Malloy and the legislature in 2011, to close a massive $3.3 billion deficit, hurt business growth.
But it’s unlikely Democrats, who control both the House and Senate, would agree to any tax cuts, particularly when the state faces a $1.1 billion budget deficit starting in 2015.
Tackling that looming fiscal cliff this year, however, without raising more revenue from businesses and taxpayers, would be a good start. Fiscal certainty is important to businesses considering an investment in the state; nothing raises red flags quicker than omens of a budget seeped in red ink.
Last week, Democratic leaders unveiled a three-page outline of their legislative jobs and business agenda. Their ideas weren’t new, focusing mostly on employment and job training, cutting bureaucratic red tape, expanding the state’s ports, and helping businesses grow near university campuses.
Proposals included recapitalizing the state’s STEP-Up program, which offers employers who hire an unemployed worker either a wage subsidy to help pay a new employee’s salary for the first six months, or a six-month training grant.
Democrats also pitched a new school-to-job program, the continuation of the state’s angel investor and insurance reinvestment tax credits, and legislation to protect businesses from patent tolls.
They’re commendable ideas, but no proposal is a game changer. They also don’t provide a long-term path to lowering business costs. It will be interesting to see what Malloy and the Republicans offer up.
The business community is waiting with bated breath.
