The marauding costs ”“ of living, of doing business, of insuring ”“ that bloat the state budget and chase companies elsewhere have long been bold-face talking points of the state”™s largest business association. These days, it is a message that is resonating a little louder in Hartford”™s corridors of power.
The call was sounded as the Connecticut Business & Industry Association hosted economic conferences this month in Stamford and Hartford, the latter event featuring a keynote speech by U.S. Sen. Joe Lieberman.
At the same time, CBIA released its own economic agenda, anchored by reducing state spending wherever possible; avoiding tax increases which CBIA believes would depress business activities further; and expediting regulatory processes for various infrastructure projects ”“ including the controversial proposal that Connecticut end a moratorium on the construction of new nuclear power plants.
CBIA did not provide a detailed breakdown of how far its proposals would reduce the $6 billion budget gap facing the state over the next two years, but stated some of the changes are long overdue.
The recession of the early 1990s was compounded by Connecticut increasing business taxes and other costs to raise revenue, according to John Rathgeber, CEO of CBIA, reversing course only after the state lost more than 150,000 jobs.
“Restoring fiscal responsibility in state government will help rebuild confidence and begin to secure our economic future, as will improving core areas, such as education and transportation, which will give our economy a solid footing,” Rathgeber said, in introductory comments to the CBIA plan. “Ultimately jobs are the best form of economic recovery. Lawmakers should do whatever they can to promote a climate in which job creation can flourish again. This will give Connecticut its best prospects for a quicker recovery and a tremendous start on the future.”
With a goal of providing an immediate shot in the arm, while acknowledging the long-shot odds of passage given the budgetary straitjacket, CBIA proposed eliminating the 70 percent cap on corporate income tax credits; accelerating the phase-out of the property tax on manufacturing equipment; and allowing all business entities to claim or pass through tax credits.
Any increase in workers”™ compensation insurance costs could also have a debilitating effect on the effort to retain and attract business in Connecticut, according to CBIA.
CBIA also believes a dedication by the state government to so-called lean techniques gaining traction in the manufacturing industry could be applied to state government, measuring agencies against performance goals on an ongoing basis.
In the longer term, a “mountain” of unfunded liabilities dwarfs Connecticut”™s budget deficits over the next few years, according to CBIA, particularly in health care where CBIA believes the Rell administration can negotiate savings in state employee health care costs; last month, a legislative commission released a prescription for reducing health insurance costs, with CBIA agreeing with the central tenet of expanding the employee-based system of health insurance.
CBIA asserted unions have been renegotiating contracts in an effort to help close budgetary deficits in other states.
Even as Connecticut looks to solve its own problems from within, leaders are hopeful the state will gain a greater share of any federal stimulus spending.
Lieberman told the Hartford conference that Connecticut stands to gain from the Obama”™s pledge of a stimulus program, with the state”™s defense and alternative energy industries standing to gain hundreds of millions of dollars in new contracts. Stratford-based Sikorsky Aircraft Corp. is by far the largest employer in Fairfield County, and parent company United Technologies Corp. expects Sikorsky to be its best-performing unit this year.
Smaller alternative energy companies based in the state could also benefit, including FuelCell Energy Corp. in Danbury and its South Windsor competitor UTC Power.
