Survey: CT Inc.’s top concerns: State economy, tax increases [HBJ]

September 11, 2015

Hartford Business Journal

Connecticut businesses are more concerned about the state’s economic condition than they were a year ago, according to an annual survey by the Connecticut Business & Industry Association and West Hartford-based New England regional accounting-consulting firm BlumShapiro.

Out of 584 responses from business leaders — nearly half of them in manufacturing and professional services — 43 percent list the state’s economic conditions as their top concern, according to the survey released Friday.

That’s up from 34 percent in last year’s survey, when the state’s economic condition was also the top concern cited.
CBIA said the increased concern is likely due to the recent legislative session, in which lawmakers approved nearly $2 billion in tax increases, including a unitary tax on companies with operations in multiple states, reductions in tax credit usage, and an increase in the corporate surcharge tax.

The survey said 48 percent of businesses found the tax increases to be their biggest worry about the legislative session. Another 26 percent felt legislators are out of touch or don’t care about businesses.

The biggest recommendation, with 53 percent voting for it, for how the state should improve competitiveness was once again to reduce taxes.

General Electric has threatened to move its headquarters out of state, mainly because of the unitary tax.

Though lawmakers later rolled back $178 million in hikes affecting businesses, CBIA said the session’s sting was fresh in respondents’ minds when they took the survey in June and July.

Senate Minority Leader Len Fasano, R-North Haven, has called for the legislature to convene a special session to repeal or alter the unitary tax and new limits on tax credits and loss carry-forwards.

On Thursday, Fasano issued another appeal to fellow lawmakers and Gov. Dannel P. Malloy, citing GE’s intention to announce a headquarters decision by year’s end.

“If you call a special session now, we can send a message together. Not just to GE, but to all businesses, that we are committed to a strong business community,” Fasano said in a statement.

The survey found that 70 percent of companies are somewhat or highly dependent on larger Connecticut companies, which illustrates a potential ripple effect should large companies relocate out of state. Of those surveyed, 29 percent claimed they are considering shifting a significant portion of their production to another state within next five years.

Half of businesses said they are holding steady this year, while 32 percent are growing and 17 percent are contracting. Last year, 54 percent reported they were steady, 35 percent said they were growing, and 11 percent said they were contracting.

CBIA economist Peter Gioia told reporters at a press briefing Friday for the survey, released in conjunction with CBIA’s annual economic outlook conference at the Hartford Marriott Hotel downtown, that the latest survey echoes earlier themes from its previous samplings.

“Business costs do matter,” Gioia said. “Two, there’s an interdependence between large and small businesses. Third, companies are constantly being recruited” to relocate headquarters or expand into other states.

One in four respondents to the latest survey said they would consider other states’ relocation pitches.