A summer survey by the Connecticut Business & Industry Association gave an unexpectedly upbeat assessment of local business conditions on some fronts, with slightly more than half of companies responding saying they planned to hire this year. Still, more than two-thirds said tax hikes are impacting those decisions.
National economic uncertainties are the single greatest concern for 34 percent of respondents, followed by economic conditions in Connecticut (26 percent) and tax increases (17 percent).
CBIA and the accounting firm BlumShapiro polled some 700 businesses, assigning a margin of error of plus or minus 3.8 percent to responses.
Just 17 percent of companies surveyed said they expect a loss this year, an improvement from the 25 percent in 2010 that recorded a loss (though at this point last year, just 19 percent of companies surveyed thought they would lose money in 2010).
While hiring and profits are up, concerns about the state”™s competitiveness are growing, according to CBIA and BlumShapiro, and just 27 percent of those polled categorized current business conditions as good.
“What we are seeing here is sort of a mixed message of yin yang,” said Pete Gioia, economist for CBIA. “Companies are starting to get on track in terms of the capacity for their profitability. ”¦ There certainly is a capacity to hire workers out there, but there certainly is also some detriments in terms of how they perceive the business climate (and) how they perceive various costs here.”
More than half of those surveyed said reducing the size of state government and making it more efficient was the single greatest action policymakers could take to spur long-term economic growth.
Incentives for business startups, growth, and relocation and transportation infrastructure improvements also were cited as priorities.
Other suggestions included lifting the regulatory burden on business, expanding and improving vocational training, providing tax credits for new hires, reducing health care costs and improving access to financing.
Just a third of companies polled said Connecticut”™s collection of new taxes would not have an impact on their hiring, or were not sure. The remaining two-thirds said taxes would affect those decisions, with 37 percent saying significantly so.
CBIA asked businesses to rate Connecticut against nine states that neighbor it or otherwise are deemed competitive for jobs. Just over 60 percent ranked Connecticut in the bottom three, with about the same percentage placing Virginia in the top three. New York and Massachusetts also scored low marks from the majority of respondents, with New York the only state considered to have a heavier regulatory burden than Connecticut.
The survey suggested other states are aggressively courting manufacturers, with more than a third of those companies polled indicating they had been contacted in the past year by economic development officials elsewhere.
Overall, 80 percent of companies surveyed said they are not considering moving elsewhere; for those that are, the vast majority cited actions by state government as the primary motivator, with the cost of doing business or living here also a factor.
