State Budget Is Focus For Small Businesses At CT Business Day

March 9, 2016

Hartford Courant

At this year’s Connecticut Business Day, presented by the Connecticut Business and Industry Association at the Legislative Office Building in Hartford on March 9, more than two dozen Chambers of Commerce and other business associations were present, including many small business owners, and were given the opportunity to ask questions directly to senators and representatives.

Gov. Dannel P. Malloy was the keynote speaker, and naturally, his focus was on the state’s budget, which is projected to have a $900 million deficit for the upcoming fiscal year, and as much as $1.87 billion for fiscal year 2019.

Malloy said that Connecticut’s slow growth, along with that of the country, is largely because of the recession of 2008. He cited that the country’s growth was slow for decades following the Great Depression, when World War II is not factored in. But the Governor added that Connecticut has been lagging behind other states because it didn’t do enough to address that adjustment.

“The message that I’ve delivered to the legislature, and attempted to deliver last year, is that we need to live within our means, and since less money is coming in, less money can go out,” Malloy said. “I’ve led with a series of cuts. Everyone bemoans the cuts, but they all agree I should cut.”

Malloy said rules need to be changed, including the “same services budget,” which puts spending on “automatic pilot.”

“That needs to change,” he said. “We need to budget based on our revenue, not what we would like to do.”

Malloy said the state is investing in small businesses in ways it hasn’t before.

“In 2015, we’ve made over $44 million in investments in, and with, small businesses, which promises to produce immediately, 1,100 jobs, but in the long-term, a substantially larger number,” Malloy said. “Quite frankly, I think we need to be investing in small businesses, because that’s where most job growth occurs. At the same time, we need to be protective and supportive of our large businesses, as well.”

The governor also said the state needs to address transportation, and that is a chief complaint from many businesses, including large manufacturers who complain of the congestion on I-95 or I-84. He pushed for investing in widening of roads and expansion of rail and bus service.
“Unless we get that right…we become an economic cul-de-sac,” he said. “Transportation is one of the great blocks [to business growth] that we are experiencing in Connecticut.”

Joe Brennan – President and CEO of CBIA – said that he has a sense of optimism about he future, despite the challenges in Connecticut.
“The thing that strikes me more than anything is the resiliency of the Connecticut people and the resiliency of the Connecticut economy,” Brennan said, adding that the state moves forward because of the type of people that attend CT Business Day.

“When we stood here, at this time last year, we were just getting into the budget process, we knew it was going to be a difficult year,” he said. “The business community did a great job of fighting back a little bit – in a respectful way, in an non-partisan way – directly saying, ‘This is going to have a major impact on our ability to compete, and our ability to provide good jobs in Connecticut, and in our ability to grow.”
Brennan added that he agreed there are going to be “hard, painful cuts to the budget,” but they are necessary.

“[We have to] have that reset this year, and follow the template or that roadmap that the governor has laid out, about living in our means and focusing on core services, and reforming the budget process, we’ve got to make those decisions this year, and send the message that Connecticut is going to be aggressive and more competitive,” Brennan said.

Breakout sessions were divided geographically, with legislators from two counties in each session. At the Tolland and Windham County session, the focus was on making Connecticut friendlier to businesses, both large and small. Key points of discussion included the Governor’s remarks on controlling spending.

State Rep. Tim Ackert (R-8) suggested that the state should actually set its budget target lower than current revenues.
“I think what we need to do, as a state, is think about a 2 or 3 percent reduction in income,” Ackert said. “I’m not sure, but if you look at the wealth leaving Connecticut, then it might be 2-to-3 percent less overall.”

Ellington First Selectman Lori Spielman, who is also a small business owner, said too much of the state’s burden is put on small businesses.
“I know in the last five years, our licenses and everyting else have tripled,” Spielman said. “You have to help the small businesses, if you don’t want them to leave. You have to start cutting at the top, not the bottom all of the time. Don’t’ ask small businesses to conserve, if you aren’t conserving.”

“We know a comprehensive plan, so that everybody knows what’s going to be cut,” said State Rep. Tony Guglielmo (R-35). “I think everybody might be willing to pitch in, if they thought they weren’t the only one getting banged.”

Workman’s compensation was also on the minds of both the businesspeople and the legislators.

Guglielmo said he had attended a company’s meeting, where they compared workman’s compensation rates with those of other states, and found that Connecticut’s costs were twice that of Massachusetts, and three times that of both North and South Carolina.

He added that Connecticut since improved its regulations, but then they’ve also returned to that level, and that affects state construction project bids for state companies.

“This is why, when we bid the contracts on the busway, very few Connecticut contractors were able to participate, because when they bid, their workers’ comp rates were higher,” he said. “What we had was Connecticut dollars building a busway, but it didn’t create any jobs for Connecticut companies. We created Massachusetts jobs. We’re a wonderful neighbor, apparently.”

“It’s not the insurance companies, it’s the state of Connecticut,” said State Rep. Dan Rovero (D-51), who added that his son runs a construction company, and uses the same insurance company in Connecticut, Rhode Island and Massachusetts, and that state regulations here cause rates to be much higher than both of the others.

“It’s all the laws that we have in Connecticut,” Rovero said.

Eric Santini of Santini Construction of Ellington said he had his insurance agent compare workman’s compensation rates for Connecticut, as well as if his business was based in Massachusetts.

“Our workers’ comp for 25 employees was about $150,000 – that’s what we’re paying in premium,” Santini said. “If we were ten miles north, we’d be paying half of that.”

Rovero said the most important way the state can solve its budget woes is “jobs, jobs, and more jobs.”

“If the businesses don’t create any jobs, we’re all in trouble,” he said. “If we don’t create jobs, and if we don’t get those people paying taxes, you aren’t going to have any money to do anything with.”

Participants were encouraged to keep writing and calling their representatives, and put pressure on them to make the appropriate budget cuts and changes in state legislation.

State Rep. Susan Johnson (D-49) said it depends on what changes you want.

“If you want to affect change in whether we have a ways and means committee, where we look at what revenues we have, and how we’re going to spend the revenues, then we need to make a legislative change – we can make a law that would change how our committee structure is functioning,” she said. “If we don’t have a committee like that, then we’re always going to be in that situation.”