A bipartisan group of state lawmakers endorsed calls for expanding small business support amid the growing labor shortage and a fragile economic recovery.
Speaking at CBIA's Jan. 21 Economic Summit + Outlook, the group also largely endorsed calls to use additional federal COVID-19 relief funds to help pay off the state's $520 billion-plus unemployment fund debt.
“Our small business owners are the crux, the foundation of our state and they provide the vast majority of jobs in our state,” said Rep. Terrie Wood (R-Darien).
"We need to provide all the support we can for businesses, who are providing jobs, and without jobs, we don't have people living here."
Wood, Sen. Paul Formica (R-Niantic), Sen. Norm Needleman (D-Essex), and Rep. Kerry Wood (D-Rocky Hill) previewed the 2022 General Assembly session with CBIA's Eric Gjede.
All four legislators support CBIA's Rebuilding Connecticut pledge, developed as a policy roadmap for helping employers, particularly small businesses, navigate the pandemic and drive job and economic growth.
"Apprenticeship programs, job creation programs, and overall business climate issues should be a priority this session," Formica said.
'Shift the Narrative'
Formica noted that while large companies "are the baseload group that propels our economy, small businesses are over 90% of the job creators in this state."
"Slow job growth is a big deal in Connecticut," he said. "Small businesses face huge difficulties finding workers."
Formica and Needleman said information technology job training programs and less red tape were essential for filling the state's estimated 70,000 job openings.
Needleman called for "a shift in the narrative" to support the skilled trades and the careers they create.
“My focus has been on making sure we don’t leave people behind and make sure we have a workforce that is working and trained properly for the jobs that exist now,” he added.
Supporting job training programs within the state’s community college programs is one way Terrie Wood believes will address the challenges.
“They’re so good, they’re fast, they’re accountable, they’re transparent, they offer a terrific education,” said Terrie Wood.
Kerry Wood added that keeping recent college graduates in Connecticut was challenging, given the state's affordability issues.
"Things we can do here is provide student loan help, especially for those skilled workers that we desperately need," she said.
Gjede framed the discussion with legislators around CBIA's 2022 policy priorities, which were released the same day as the conference and focus on addressing the labor shortage and tax relief.
Connecticut is projected to have a $2.2 billion budget surplus this fiscal year, and $1.9 billion the following year, making its near-term fiscal health one of the strongest in the country.
“The state’s current fiscal picture provides a platform to do much more than hold the line on taxes and pay down long term liabilities,” CBIA president and CEO Chris DiPentima said earlier at the conference.
Gjede referenced the 2017 bipartisan budget reforms "that certainly helped put us in a strong fiscal position coming out of the pandemic."
CBIA is calling for approximately $200 million in tax relief, largely targeted at small businesses and designed to address the labor shortage, which impacts 80% of the state's employers, and stimulate private sector investment.
The panel of lawmakers generally agreed that tax relief was a timely issue, sharing different ideas for tackling the issue.
“I think there is a lot we can do in small steps this session, but I would also like to see some long term strategies put in place so that future sessions can continue the work we do this session,” said Kerry Wood.
The Rocky Hill Democrat said she supports expanding the state's manufacturing apprenticeship tax credit to small and midsized manufacturers, changing the state's property tax structure, and providing relief for retired residents.
"Tax relief is long overdue," said Terrie Wood. "We can't count on federal funding for the long term. We should absolutely be looking at cutting taxes."
"It's always time to provide tax relief for taxpayers in Connecticut, whether they're businesses or residents," he said. "We have to be able to find ways to efficiently fund government, both on the local and state level."
Needleman called addressing the tax code "a very long walk into the woods," adding he believes it will be difficult to implement any type of tax relief in this year's short legislative session.
"Everybody on this panel would agree that the tax code is not the most equitable or productive in a lot of ways," he said.
"I also believe fundamentally that one-time revenue should never be used to build permanent spending or permanent tax cuts because two-three years down the road we could be back in the soup."
Last year, the Lamont administration and the legislature agreed to use $155 million in federal COVID relief funding to help pay off the approximately $1 billion the state borrowed from the federal government to pay record unemployment claims.
CBIA is recommending the state leverage additional federal relief dollars to avoid tax hikes and assessments on employers at a crtical point in the Connecticut's pandemic recovery.
Gjede said Connecticut "cannot afford to repeat the aftermath of the 2008-2010 recession, when employers were hit with unemployment tax hikes four times higher than in neighboring states."
"First of all, that number [$155 million] was much lower than the business community was asking for," said Kerry Wood.
"This is part of what these dollars are there for and I do support putting more money into this fund so that we can help the business community over the long term. Ultimately this falls on their shoulders."
Terrie Wood called the issue critical, noting the impact that unemployment tax hikes and and assessments will have, "particularly on small businesses."
"The more we can pay that down and reduce the burden on businesses, the better off we are going to be," she said.
Small Business Support
Needleman, who owns manufacturing company Tower Laboratories, said "speaking out of self-interest, as a business with a very large payroll, of course I would like that."
"As with everything else, the state government and municipal governments find themselves dancing on the head of a pin—there's going to be a lot of demand on a small amount of money," he said.
Needleman said he preferred to see the U.S. Congress take action and "hold all state unemployment funds harmless because it's such a big problem across the country and in Connecticut."
"That said, I would like to see us use some of that [federal funds]," he said.
"I remember having to pay that large assessment some years ago," said Formica, who owns Flanders Fish Market & Restaurant in East Lyme.
"We have to do whatever we can to help small businesses. This will come out as an important thing to continue."
Gjede also asked the four legislators about the CREATES Report—commissioned by the Lamont administration to address government efficiency and the pending surge in state employee retirements—that recommends $600 million to $900 million in annual taxpayer savings.
"I think there were a lot of good recommendations in that report and some of them should be enacted," Needleman responded.
"I know of no agency that isn't terrified about the loss of institutional knowledge. We have to be very careful about replacing knowledge and people with technology and untrained or newly trained people—that always creates some risk.
"There's savings to be had. I believe that money invested in technology should have an added and exponential rate of return."
Formica said he supports recommendations for more public-private partnerships, expanding the use of nonprofit organizations, and "modernizing and streamlining state government services."
"We also have to be mindful of those jobs that cannot be replaced by technology," he said. "They may be able to be enhanced, but they can't be replaced."
Kerry Wood, who co-chairs the legislature's Insurance and Real Estate Committee, noted the report's recommendations as they related to state-run healthcare plans for public sector employees.
"I love the idea of letting taxpayers know that we're good stewards of their dollars by making sure the state employee healthcare system is being operated in the most efficient way possible," she said.
"There is a huge opportunity to streamline state government services," she added, citing the recent overhaul of Department of Motor Vehicles operations as an example.
Terrie Wood said there were a number of recommendations in the CREATES Report that should be pursued.
"Really, the key word for me is simplify, simplify," she said. "We can reduce some of the redundancies in state government and streamline and simplify."
She added that she supported reforming the state's "complicated" hiring practices, implementing a common payment system, and expanding the use of nonprofit organizations.
"A lot of our nonprofits are capable of delivering the same services at a lower cost and higher quality," she said.
"They're close to the people, they're close to the communities, they know how to best deliver these services."
The 2022 Economic Summit + Outlook was made possible through the generous support of Webster Bank.