Business Confidence in Connecticut at All-Time Low

Opinion by Rep. Jason Perillo

I have spent the greater part of the past several years insisting that increases in taxes, spending and borrowing are damaging to our fragile economy.  I said that the massive $2 billion tax increase enacted by Governor Dannel P. Malloy and legislative Democrats to support a bloated state government would make us among the last in the nation to recover from the severe economic downturn that began roughly five years ago.

This has come to pass.  Connecticut ranks 49th out of the fifty states in terms of economic growth, and now the Connecticut Business and Industry Association (CBIA) and accounting firm BlumShapiro have released their 12th annual survey of businesses in the state and the news isn’t very good.

Over 80% of the 377 companies that took time to respond to the survey indicated that they had a negative opinion of Connecticut as a place to do business.  Since CBIA began this survey in 2001, they have never recorded a lower rating than this.  A significant portion of the blame from these companies falls on the massive increase in personal income tax levied by Governor Malloy.

The report urged legislators to consider reductions in taxes, spending, and regulation.  I find this interesting, because it is clear that tax and spending cuts are not on the table for discussion in Dan Malloy’s Hartford, and the significance of this probably can’t be overstated.  

We are in a time and place where the rest of the nation has begun to move forward from the recession and make meaningful economic strides forward.  Most states have done so without raising taxes on residents who were already strapped as a result of the recession.  Yet Connecticut’s growth remains negligible, and its unemployment continues to hover at 8%.  This seems a pitiful return for those who bought the “shared sacrifice” rhetoric from Governor Malloy at the start of 2011, and who may have thought paying $2 billion more in taxes would solve something.

The CBIA report also highlighted something else which is extremely important and bears close watching.  Roughly one third of those responding to the survey indicated that they had been solicited by representatives from another US state seeking to have them relocate their business elsewhere.  We have certainly heard that other states have been trying to “poach” good companies with strong business models from Connecticut.  The high-profile visit of Texas Governor Rick Perry to this state last spring to lure manufacturing jobs away was only one of many attempts by other states which have been much more low-profile and have received much less media play.

It takes a lot for a business to pick up and relocate, but other states are willing to do what it takes to make the transition smooth and affordable with long-term benefit.  There are 48 states out there with better economies than Connecticut, and right now we aren’t able to make much of a case to our current businesses as to why they should stay here and stew in our self-inflicted economic malaise. 

Without a significant change in our current tax policy, we never will close that distance, let alone make the case to businesses in those other states that we are an appealing place for them to move to.