Top Three Questions in the CT Budget Debate

Like most business people, I have too often looked at our political process with bewilderment and Questionpassivity. So last week, I decided to change that and attended a number of events in Hartford intended to illuminate businesses’ position in the Connecticut budget debate. One of the advantages of a small state like Connecticut, is that the government is very accessible. My experience illuminated three questions that business professionals should ask themselves. (For a summary of the Appropriations Committee proposal, click Proposal Summary )

Is anybody really representing your view?  The Connecticut Mirror and CBIA have treated the state to an excellent series of panel discussions addressing the key budget issues. Last week I heard Governor Malloy, Joe Brennan (CBIA, President) and Oz Griebel (President, Metro Hartford) address a series of questions on the Connecticut business environment. What struck me the most about the discussion is that all parties seemed to infer that every Connecticut business is a C-Corporation. Most businesses are “Pass-Throughs” (i.e. S-Corporations, LLCs, and Partnerships) and are most impacted by personal taxes. Small business owners should understand that their priorities are highly underrepresented in Hartford. It is worth aligning with an association that actively lobbies your concerns.

What is the real question? Governor Malloy has successful steered the budget debate to a question of whether to raise taxes or cut social services to the most needy. When I hear Republican say that social program cuts are unacceptable and the Governor conceding that the Appropriation Committee’s revenue plan is unpassable, I conclude that these are not choices at all. I heard a representative from Yankee Group say that Connecticut public employees are compensated (wages and benefits) 42% higher than private sector employees in a position with comparable requisite skills. Connecticut’s budget problems are structural and it is striking that neither party is willing to address this issue directly for fear of retaliation. The real question is: “Do we restructure or not?”

What is at the heart of Connecticut’s business unfriendliness? Many in the business community are quick to point at taxes and regulation as the reason for Connecticut’s slow economic recovery. I agree that taxes and regulation are onerous. I observe that when businesses leave Connecticut however, they often don’t go more than 250 to 300 miles and take up shop in another high-cost state. I believe that lack of vision and leadership is a bigger culprit than cost of government. Connecticut’s economic development efforts are disjoint. While the Malloy administration has introduced some excellent programs for small business and startups, we are still willing to spend more money on keeping the jobs we already have than developing new ones. Does it make sense to spend millions of dollars to entice Jackson Labs to move here and then not surround it with a technology-based small business community to attract necessary talent?

What to do?  I suggest that in the near future, you telephone (not email) your state representatives to discuss three points: the importance of restructuring state agencies to operate in the current revenue stream, which of the proposed new taxes are most painful for you, and what you feel is most necessary for a full economic recovery.