CT businesses say investing in state’s future trumps tax cuts

The CT Mirror

Joseph McGee, of the Business Council of Fairfield County

Connecticut’s gubernatorial contenders are discussing tax cuts — but the state’s business leaders are trying to shift the conversation.

No one in the business community is clamoring for taxes to go up, but their message to those running for the state’s top spot increasingly is: First tell us your plans to invest in transportation, education, job training and energy. Then we can talk relief.

“It’s clear that the issue of taxes and spending is front-and-center, and that there is a feeling we are taxed too heavily and spend too much – I get it,” said Joseph McGee, vice president of public policy for the Stamford-based Business Council of Fairfield County. “But there needs to be a real conversation in Connecticut about an investment strategy for the future.”

“Overall we shouldn’t be raising taxes,” said John Rathgeber, executive director of the Connecticut Business & Industry Association. “We can live with a sustainable (state spending) growth rate that makes the investments necessary for a stronger economy.”

“I’m not arguing for more taxes,” McGee added. “But for good public policy and good choices, we need to know what we’re facing, what (the candidates’) priorities are, and what their plans are to achieve them.”

Malloy, who addressed more than 200 business leaders Wednesday at the CBIA’s annual Connecticut Business Day event at the Legislative Office Building, assured them he not only won’t raise taxes – if he runs for and wins a second term – but the modest tax cuts he proposed in February are just a hint of relief to come.

When asked about the nearly $1 billion deficit nonpartisan analysts project for the first budget after the election, Malloy said he was confident that Connecticut’s economic recovery will accelerate, raising enough revenue without tax increases to cover that gap.

“But even if we did have a deficit, we’re not going to raise taxes,” he said. “We’re done.”

The Democratic governor signed more than $1.5 billion in tax hikes three years ago to help plug the $3.7 billion shortfall he inherited upon taking office.

Hoping to wash away any lingering taxpayer resentment, the governor last month proposed about $200 million in tax breaks, the largest involving a $55 rebate for most middle-income taxpayers.

Malloy’s Republican rivals have been far bolder.

Both Danbury Mayor Mark Boughton and Senate Minority Leader John P. McKinney of Fairfield have talked about rolling back $1.5 billion in taxes – which represents about 9 percent of the state’s current operating budget.

Greenwich businessman Tom Foley, the GOP’s 2010 gubernatorial nominee and a contender in 2014, recently said his goal is to freeze all discretionary state spending to eliminate any future red ink, and then to focus on cutting the state’s 6.35 percent sales tax.

Foley infuriated Malloy supporters in 2010 by insisting that he could eliminate a cavernous deficit without any tax increases or borrowing, and while sparing almost $2 billion in education funding from any cuts.

When pressed for details, Foley told The Mirror four years ago that he expected 40 percent of the problem to be solved by a robust economic recovery that never came to pass.

Meanwhile, when he was first running for office, Malloy wouldn’t rule out tax hikes, and “he took a political beating for it” on the campaign trail, said Roy Occhiogrosso, who served two years as the administration’s senior policy adviser.

Occhiogrosso called the latest huge GOP tax cut proposals “beyond absurd. … You would have to absolutely eviscerate state spending to get there. It is an intellectually dishonest approach for these people to take.”

Boughton defended his position, saying, “It’s about priorities more than tax policies.” For example, he said, had the administration spent hundreds of millions of dollars less in corporate aid during the past few years, it might not have to raid fuel revenues to pay for non-transportation programs.

Still, if talk of tax cuts is again framing Connecticut’s gubernatorial debate, McGee says it’s time for a wider frame with more long-range perspective.

A private-sector planning association for the tri-state region recently estimated that the rail line linking New Haven and New York City needs about $3 billion in improvements strictly to keep the infrastructure in good repair.

And both McGee’s business council and a second business coalition, the MetroHartford Alliance, have advocated strongly over the past two years for a multi-billion-dollar state investment to develop high-speed commuter rail between Hartford and Manhattan.

“We all want more and want to pay less,” said R. Nelson “Oz” Griebel, CEO of the Hartford alliance.

But “the private sector fully understands that without a modern transportation system, high-speed Internet access and a superior public school system, we will not be able to maintain the employment levels we have in Connecticut, let alone recover the jobs we lost in the last recession. We recognize that those investments are needed.”

The CBIA recently unveiled an agenda to dramatically improve Connecticut’s business climate by 2017. And while it hopes to expand business access to certain tax credits — it also insists on accelerating “priority investments in roads and bridges, transit systems, air and seaports.”