Hartford Business Journal

24 Hartford Business Journal • May 4, 2015 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL Union concessions must be part of budget talks T he Republican Party has taken much criticism in recent years for its paltry perfor- mances in statewide elections, but the GOP has finally done something to warm the hearts and minds of taxpayers: propose a budget that demands givebacks from state employee unions. Republicans recently proposed a two-year, $39.5 billion alternative budget that relies on more than $500 million in savings from a wage freeze and other concessions from state labor unions. They also want to require future state employees to receive 401(k)- style retirement benefits rather than a pension. It's a fair and reasonable ask from a constituency whose salaries and benefits account for more than a quarter of the state budget. Our support for union concessions is not meant to be an attack on organized labor. We aren't looking for layoffs or a disbanding of collective bargaining rights, but a wage freeze should be standard practice when the state budget faces billion-dollar deficits. And the idea that new state employees still have access to a pension is mind-numbing at a time when such retirement perks are all but extinct in the private sector. Unfortunately, the Republican budget is essentially dead on arrival. The GOP carries little political weight in the legislature with Democrats controlling the House, Senate, and Governor's mansion. It's troubling that no Democratic leaders have raised the notion of union concessions to help balance the budget. Instead, Malloy and his fellow Democrats put forward spending plans that either made deep cuts to health and human services nonprofits and/or raised hun- dreds of millions of dollars in new tax revenues from businesses and individual taxpayers. Unions complained their dedicated public servants were unfairly targeted in the Republi- can budget, but what about the state's neediest residents who will lose access to care and treatment under Malloy's spending plan? Should they not have a voice in the debate as well? To be fair, state labor unions have been part of the budget-balancing solution in the past. In 2011, they agreed to a two-year wage freeze and new retirement and health benefits restrictions that generated hundreds of millions of dollars in savings. State employees once again must be asked to shoulder some of the budget pain. At the very least, a two-year wage freeze is reasonable. n Democrats' budget cause for concern Meanwhile, Connecticut Democrats struck another major blow to business con- fidence last week. First, the Appropriations Committee pitched a reckless $40.5 bil- lion budget plan that sidesteps the state's mandatory spending cap and proposes more than $500 million in new spending beyond what was recommended by Malloy's budget, which already drew criticism for increasing business fees and taxes. Then, the Finance, Revenue & Bonding Committee approved a plan to increase rev- enues by $1.8 billion over the next two fiscal years, through tax increases, postponing tax breaks, and expanding gaming. Their plan includes more than $350 million in tax increases on corporations and raising the top marginal income tax rate. Lawmakers also want to extend the sales tax to accounting and engineering services. It appears the Democratic-controlled legislature has failed to grasp the severity of Connecticut's financial and economic vulnerabilities, opting to continue to spend more money than we have and increase taxes without considering the consequences on the cost of living and doing business in this state. Tax increases are likely all but inevitable and the results will be the same as they've always been: Connecticut will maintain its reputation as one of the worst states to do business in, giving executives here and around the country more reason to do business elsewhere. n OTHER VOICES GOP budget supports employers, encourages job growth By State Sen. Len Fasano W e are all tired of seeing families struggle as a result of Connecticut's high unemployment rate. We are tired of Connecticut being closed for business. We are tired of watching the gover- nor break promises, pick winners and losers, and create an environment in which businesses struggle to thrive. That is why Repub- licans came together to create "Blueprint for Prosperity," an alternative to the governor's budget that not only outlines spending for the next two years, but that also makes long-term changes to how our state budgets to reduce taxes for working- class families, support the most vulnerable, and eliminate burdens on local employers. The future of Con- necticut is dependent on job growth, and people cannot grow jobs unless govern- ment gets out of the way and instead empowers individu- als to grow, expand and find success. This year, the governor proposed a budget that does not seek change or empowerment, but rather would hinder business and job growth by capping tax credits business- es rely on. Capping credits, paired with other increases, would burden employers by an additional $820 mil- lion in tax increases. The Republican plan rejects these propos- als and instead lays out a plan that restores the benefit of business tax credits. We also propose eliminating the corporate income tax surcharge and the business entity tax, all while preserving core social services and funding support for the most vulnerable. Business tax credits in particular are huge incentives we need to protect. They encour- age businesses to come to and expand in Connecticut. Many businesses also make everyday decisions based on these credits. For exam- ple, a manufacturer may decide to purchase new equipment if they can count on a tax credit to help reduce their financial burdens. To take away the ability to use these tax cred- its, after they have already been secured and budgeted for by a business, is breaking a promise that will have serious repercussions. Those who are completely out of touch with the way businesses operate have referred to these credits as "loopholes." But these credits were created purpose- fully to encourage business investment in Connecticut. In the governor's own negotiation last year with United Technologies Corp. to solidify their business operations in Connecticut, tax credits were used as a powerful incentive to benefit the company. Clearly, businesses like NBC and ESPN make decisions on how to expand and invest based on programs or initiatives incentivized by the state. By cutting back on promised tax cred- its, the governor's budget jeopardizes the trust between the state and companies. This move also sends an extremely negative message to any business con - sidering coming to Connecticut. The Blueprint for Prosperity aims to send a different mes- sage — one of hope and prosperity for everyone. We level the play- ing field by enabling all businesses to con- tinue to count on the tax credits they were promised. We also reject the governor's shortsighted think- ing. Sure, capping tax credits today plugs up a budget hole. But in the long run, a cap on these credits is a disincentive for growth. We hope to change the conversation with our proposal, and encourage bipartisan col- laboration in the legislature. Growth, opportunity and prosperity for all: These are three goals lawmakers on both sides of the aisle share. Together, we can achieve them, but only if we change our path and move in the direction of hope. n Senate Minority Leader Len Fasano repre- sents the 34th District towns of Durham, East Haven, North Haven and Wallingford. HARTFORDBUSINESS.COM POLL Should lawmakers push state labor unions for wage and benefits con- cessions? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Will you stay in CT post-retirement? 14.7% Yes 69.8% No 15.5% Maybe State Sen. Len Fasano ▶ ▶ Business tax credits in particular are huge incentives we need to protect. They encourage businesses to come to and expand in Connecticut. Send Us Your Letters The Hartford Business Journal welcomes letters to the editor and guest commentaries for our opinion pages. Electronic submissions are preferred and welcome at: editor@HartfordBusiness.com. Or you may fax submissions to Editor, Hartford Business Journal, at (860) 570-2493.

• Cover