Getting its fiscal house in order might be state government’s best form of economic stimulus, topping any tax credit or grant program, Connecticut’s chief business lobby argued Thursday.
The Connecticut Business & Industry Association unveiled a 2013 legislative agenda based upon three principles: a more sustainable state government, more competitive business costs and a greater emphasis on workforce training and education.
Controlling spending and stabilizing the state’s tax outlook “actually can be the best economic development program in the state,” CBIA Senior Vice President Joseph F. Brennan told Capitol reporters during a briefing Thursday.
Gov. Dannel P. Malloy and the legislature used $1.5 billion in tax hikes, a union concession package and other spending cuts to close a nearly $3.7 billion deficit in the 2011-12 budget.
State finances ran a modest $143 million in the red last fiscal year, and Malloy and the lawmakers closed a $365 million deficit in the current budget during a mid-December special session.
But fiscal analysts for the Legislative and Executive branches have estimated a shortfall of as much as $1.2 billion built into the fiscal year that begins July 1, based on current spending and revenue trends.
Malloy has said he has no intention of raising taxes but won’t rule that out. The governor’s proposal for 2013-14 is due to the legislature Feb. 6. Some of Malloy’s fellow Democrats in the legislative majority already have expressed skepticism that a gap that large can be closed without a tax increase.
But Brennan said it’s this uncertainty that has kept the state’s unemployment rate close to 9 percent.
“We talk to people and they’re just quite not sure of what the future is in Connecticut,” he said.
Brennan added that “we also think we have great opportunities here.”
While looking for ways to cut spending six months from now, state officials also should be looking to streamline agencies and consider major policy changes that could yield larger savings a few years down the road, he said. This could include finding new ways to curb recidivism and reduce Connecticut’s prison budget, as well as enabling more elderly residents to avoid or postpone nursing home care and receive less costly treatment in their homes.
“Spending is going to be a big issue for us and we’re going to be fairly aggressive in sharing those ideas,” CBIA Vice President Bonnie Stewart said, adding that the association would release a major report on state spending Jan. 23.
The CBIA also wants lawmakers to revisit the controversial statute enacted last year that requires most businesses to provide part-time workers with paid sick leave.
Brennan said the association is seeking to modify the measure to ensure all manufacturers are exempt from the requirement, and to give companies some mechanism to address absenteeism that results from misuse of paid leave.
Other proposals to help control business costs include:
* Implementing aspects of Malloy’s new comprehensive energy strategy that reduce energy costs;
* Diversifying the state’s portfolio of energy resources, including making capital investments to increase the availability of natural gas;
* Eliminating taxes on energy transmission and generation;
* Reducing mandates on health insurance companies — with nearly 60 mandates for health carriers, Connecticut imposes more than most other states, the CBIA argues.
* Making it easier for hospitals, employers and insurance companies to negotiate charges for services provided in workers’ compensation cases.
CBIA proposals to strengthen the state’s workforce and general business economy include:
* Ensuring that 2012 state education reforms are implemented, including increasing pre-kindergarten educational opportunities, improving evaluation of pre-school programs and increasing early reading and literacy program slots as well as the length of time students spend in school;
* Allowing students who aren’t in school or in secondary education manufacturing programs to participate in manufacturing internships;
* And expediting the completion of priority transportation projects.