A new survey suggests growing willingness on the part of Connecticut employers to expand elsewhere, on fears state budget deficits will result in higher taxes.
“Employers are extremely frustrated with the direction of the state of Connecticut,” said Joe Brennan, senior vice president of public policy for the Connecticut Business & Industry Association (CBIA), which published the survey results in mid-January. “They are frustrated with the inability of the government to provide a budget that cuts spending and balances itself without any increased taxes. The other number that was of major concern to us is 68 percent of our members said that if they are going to expand their businesses, they would do so outside the state of Connecticut. So the legislature and the entire state government have a major job in front of them about restoring the confidence in businesspeople so they make those investments in the state of Connecticut.”
Gov. M. Jodi Rell recently vetoed a series of budget adjustments by the Connecticut General Assembly, with Democrats failing to override the veto.
Before announcing he would not run for re-election, U.S. Sen. Chris Dodd released what he called a jobs agenda for the state, saying he would push for a temporary lending facility that would make microloans directly to small businesses with good credit that otherwise are having difficulties getting loans.
He would create tax credits for businesses that retain jobs or create new ones. Dodd also called for more assistance to entrepreneurs, without providing specifics on how his program would differ from existing ones such as the U.S. Small Business Administration and other agencies.
Under a “cash for caulkers” program, Dodd would provide additional funding for weatherizing homes. He also supports the idea of “clean energy business zones” that provide tax incentives for businesses developing or using such technology.
In September, he introduced a bill that would give assistance to domestic manufacturers in a bid to better position them against foreign competitors. And he wants a “national infrastructure bank” that could support such projects via grants, loans or credit guarantees.
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Several local industry groups say their members have seen increased business activity in the new year, while noting dour economic reports continue to stream out of Hartford and Washington, D.C.
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“It”™s kind of like watching water getting ready to boil,” said Jack Condlin, president of the Stamford Chamber of Commerce, speaking at an economic forum this month sponsored by his organization and CBIA. “We see the flame; we see the water, it”™s in the pan ”“ but when the hell are we going to start seeing the little bubbles that shows us it”™s boiling?”
In remarks to a CBIA gathering in Hartford this month, the head of the Federal Reserve Bank of Boston said he sees three headwinds for the regional economy this year: continued banking problems, cautious consumers and businesses, and discouraged workers seeing their skills atrophy as they languish on the sidelines or accept jobs beneath their skill levels.
“I expect a rather slow recovery in output and a rather slow recovery in employment,” said Eric Rosengren, president of the Boston Fed. “The strength of the recovery is partly dependent on how confident businesses and consumers are becoming that the economy will be able to grow fast enough for tangible progress in labor markets, and (that) the recovery will become self sustaining.”
Fairfield County is the lone county in New England outside the jurisdiction of the Boston Fed, instead tracked by the Federal Reserve Bank of New York.
“Professional and business services, and leisure and hospitality, have often increased employment in the first year of a recovery,” Rosengren said. “However, the degree has been significantly less in the past two recoveries compared to the 1980s ”“ and in fact (was) negative for professional and business services in 2001 (and) 2002. The strength in these sectors this time around will depend on how quickly consumer and business confidence returns.”
At least one corporate economist sees a faster recovery in employment than perhaps what Rosengren suggests.
“As demand picks up, I think we will see that employment comes back a bit quicker than it did in the past few recoveries,” said Kevin McCarthy, vice president and economist of Cushman & Wakefield, while addressing the conference in Stamford. “Business investment fell at the ”¦ fastest rate ever recorded. Businesses will have to reinvest, because won”™t have the ability to respond to the increased demand.”
