Connecticut’s business community seems resigned to the fact that any budget agreement between Gov. M. Jodi Rell and legislative Democrats will include a surcharge on the corporation tax.
Rell has proposed a 10 percent surcharge while the Democrats proposed a 15 percent hike.
Each side proposed that the surcharge stay in place for three years.
Two major business groups, the Connecticut Business & Industry Association, and MetroHartford Alliance, said last week that whatever surcharge is implemented should be as short and small as possible.
Well, OK. Short and small, at least when it comes to corporate tax surcharges, can be good things.
But let’s be clear. Connecticut companies stand teetering directly in the path of a jobs-busting tropical storm.
Adding a surcharge on the corporation tax will help close the state budget gap, while striking another blow against job creation.
This is a curious strategy at a time when the state has already lost 70,000 jobs over the past two years.
Even a member of Rell’s Council of Economic Advisors, Donald Klepper-Smith, chief economist for DataCore Partners in New Haven, estimates that the state is on pace to lose 80,000 to 100,000 jobs before the recession ends.
But, ever the good soldier, Klepper-Smith does credit Rell for spreading the pain associated with trying to close the deficit.
To that point, it is certainly the fact that social service groups have taken their share of lumps from Rell’s cost cutting.
It’s just that creating more of a need for social services — which job-growth destruction is sure to do — makes no sense.
In the midst of the mayhem, at least MetroHartford Alliance and other chambers of commerce have presented a well-reasoned set of proposals that aim to provide long-term financial stability to the state.
The chambers advocate establishment of a blue-ribbon panel of 15 individuals from a cross section of the private and public sector and labor to present policymakers with a list of recommendations by the start of the short legislative session in January.
MetroHartford has taken out ads in local newspapers summarizing the position paper.
The proposal includes:
• The establishment of a dedicated revenue source (e.g. a percentage of the sales tax) to fund state and municipal pension obligations;
• Reform of the probate-court system;
• A moratorium on all unfunded mandates that the state imposes on municipalities and a subsequent evaluation to determine which ones to reinstitute;
• The option for the state and municipalities to contract with private entities to provide services to the indigent, the elderly, and those with special needs.
The governor’s office and legislative leaders need to bring MetroHartford’s proposals to the negotiating table — and fast.
At the least, creation of a coalition of business, public sector and labor interests to make recommendations on policies that will provide the state with long-term financial stability is worth exploring.
