A State Divided

When the French literature giant Gustave Flaubert once said, “There is no truth, there is only perception,” he could have been talking about the shape of Connecticut’s economy.

Two reports published within weeks of each other raise pointed questions about the state’s business climate. The first report, from the US Chamber of Commerce, called Connecticut 'inhospitable' when it comes to attracting or keeping employers. The second report, from Council on State Taxation, said the state has some of the lowest tax burdens on businesses.  And though the two reports aren’t directly related, legislators say the state has a long way to go to bridge the varying views.

Overcoming that perception must be a part of the October special session on jobs, said State Sen. Carlo Leone, a Democrat representing Stamford and Darien in the 27th Senate District.

“As a legislator, you get caught trying to make sense of what’s real and what’s not,” Leone said. “Perception is reality when a message is drilled into a person’s mindset.”

The U.S. Chamber of Commerce report blamed Connecticut’s policies for the lack of job creation.

“The relationship between employment policies and economic growth is well documented. So, too, are the negative impacts of excessive regulation on job creation and the economy,” according to the report. 

The report took issue with restrictions on employer inquiries to applicant history and the requirement that employers pay employees for jury duty. It criticized the private sector unionization rate of 8.5 percent and the public sector unionization rate of 64.4 percent. The report also criticized the state for its mandated minimum wage of $8.25 an hour, $1 more than the federal minimum.

“There is a moral component here. Our wages need to reflect that Connecticut has a higher cost of living. The minimum wage here is not a living wage,” said Juliet Manalan, press secretary for Gov. Dannel P. Malloy. 

Malloy’s office further refuted the report, listing several steps since the Governor took office.

“He appointed Catherine Smith, a well-known, well-respected former insurance executive as his high-profile DECD Commissioner. She knows what it takes to create jobs because she's done so herself,” Colleen Flanagan, the governor’s Communications Director, said. 

Flanagan also mentioned the CT Airport Authority, which she said will help make Bradley and the state's five other airports part of the economic strategy to grow jobs.

“In addition, obviously the Chamber of Commerce is a business lobby group, not an impartial survey,” Flanagan said. “Governor Malloy has been the most aggressive governor this state has had in years in terms of the job growth initiatives he's proposed, and the time he's taking to reach out to and get to know business leaders - large and small - to ensure they know that Connecticut wants to work with them, and what he's willing to do to keep companies here and help them grow.”

Flanagan also named the creation of the “First Five" program, naming the three companies participating so far: Cigna, TicketNetwork and ESPN, which will create up to 800 jobs at its already mammoth Bristol facility.

Under First Five, the first five businesses that commit to creating either 200 instate jobs within two years, or 200 jobs and at least a $25 million investment in five years, will receive low-interest loans and workforce training grants. 

“If I were the governor, I wouldn’t be bragging about First Five,” said House Minority Leader Larry Cafero, a Republican representing Norwalk in the 142nd House District. “I voted for it, but we all thought it was going to go to outside businesses. Instead he just gave it to companies already here.”

Yet no one can deny that businesses have left or are leaving Connecticut, said State Rep. Terrie Wood, a Republican representing Norwalk in the 141st House District.

“National research shows that Connecticut hasn’t grown,” Wood said. “That’s irrefutable. The hard cold facts are there – many left the state, and too many don’t want to come to the state.”

For State Rep. Livvy Floren, a Republican representing Greenwich and North Stamford in the 149th House District, the issue goes beyond taxes.

“It’s not only taxation, but it’s all the hoops and paperwork businesses have to go through, like fees and permit fees,” Floren said. 

Meanwhile, the non-profit Council on State Taxation ranked Connecticut at the bottom of the country for tax burdens on businesses.

According to the report, state and local business taxes comprised just 3.3 percent of the state’s private sector economic activity. That’s below the national average of five percent.

Connecticut Voices for Children said the report proves that business taxes aren’t to blame for the state’s 9.1 percent unemployment rate.

“The business group has placed Connecticut at or near the bottom of its tax rankings for the last seven years,” according to CT Voices’ summary of the report. “In encouraging job creation, policymakers should turn their attention to other costs that weigh more heavily on decision making for Connecticut businesses, such as energy, health care, and transportation costs.”

However, the Connecticut Business and Industry Association said the study doesn’t consider other barriers to business.

Cafero agreed with CBIA assessment.

“I think the report, which came out about business tax burden -- and I stress business tax, because Connecticut has the highest tax burden overall -- shows that taxes alone do not make up for attracting business,” Cafero said. “In relation to the other report, the cost of doing business, and the political atmosphere here, is what caused us to be rated at the bottom.”

There's one thing all sides can agree upon: these perceptions must be addressed come October.

To prepare for that session, Malloy took a Jobs Tour across the state. He visited more than 50 business groups and chambers of commerce, held private meetings and took onsite tours of companies in Connecticut, Flanagan said.

“Businesses, for the first time in a long time, know that, even while there may be some points on which they disagree with the Governor, they actually have someone in the Governor's Office who wants to drill down and figure out what needs to change to help Connecticut grow jobs and stabilize our economy,” Flanagan said.

At the same time, Cafero said dealing with jobs should have been part of the regular session. Instead, he said there’s too much uncertainty, adding that, as of Aug. 15, there was still no budget.

“It’s an atmosphere, an attitude and a culture that needs changing,” Cafero said.