Hartford Business Journal

20 Hartford Business Journal • November 30, 2015 www.HartfordBusiness.com EDITORIAL Lawmakers agree (for now) tax hikes won't solve budget crisis I f your head is spinning trying to grasp the myriad budget-deficit plans pitched by Republicans and Democrats over the last month, you're not alone. Whether it's suspension of the state's public-finance system for elections, early- retirement incentives, or cuts to social services, education and municipal aid, it's been difficult to track the numerous proposals aimed at trimming nearly $350 million from this fiscal year's budget deficit. Regardless of the nuances in each proposal, there is a common theme that ties them all together: A realization by most policymakers that Connecticut can no longer tax its way out of fiscal crisis. As a budget deal nears, Democrats and Republicans have largely avoided deficit- reduction remedies that sack taxpayers with additional burdens. It's a smart policy strategy and a clear signal the business communities' negative public reaction to the legislature's June tax hikes reverberated throughout the State Capitol's golden dome. Will this sentiment last? We aren't so sure of that. Future tax hikes will most cer- tainly be on the table soon, with the Office of Fiscal Analysis projecting a $2.3 billion deficit over the next two fiscal years. In fact, Senate President Martin Looney recently suggested the state look into a mansion tax, according to published reports. Indeed, the current deficit-mitigation negotiations are simply a minor battle to a looming budget war. For now, however, it appears the business community will be spared from having to contribute more to the state's costly spending habits. If certain proposals gain support, like capping the new unitary reporting system for corporation taxes, some businesses may actually experience some small tax relief. That's a gift many businesses will appreciate this holiday season. While lawmakers seem to be closing in on a path forward, it's a good time to reflect on some of the good and bad policies that have been floated in recent weeks. Proposals that aren't incorporated into the final deficit-mitigation plan are likely to be retread in the months and years ahead. One that is most troubling is early-retirement incentives, which have been pitched by Senate Democrats and Republicans. It's a bad idea and counterintuitive to the efforts Gov. Dannel P. Malloy and others are making to shore up the state's troubled pension system, which currently has $25.7 billion in unfunded liabilities. While early-retirement offerings save money in the short term (possibly as much as $80 million over the next two fiscal years, according to Senate Democrats) they simply add additional pension liabilities that prove more costly in the future. Legislators must stop short-term fixes that serve as a Band-Aid to our state's prob- lems rather than a cure. That's what got us into this mess to begin with. Malloy pitched some reasonable cost-savings ideas early on, including closing a prison and courthouse, the type of restructuring that should be considered and imple- mented across all state agencies. Ironically, he's also pitched eliminating certain com- missions that promote women and minority groups, ideas Republicans have pitched for years only to be condemned by Democratic demagoguery. Negotiations are currently ongoing with many state-employee unions whose con- tracts are nearing expiration; they must yield givebacks, or at least wage freezes. This isn't an attack on organized labor, but simply a nod to the current-day economic reali- ties, in which state employees account for about a quarter of the state budget. In another strange twist, Democrats have even urged suspending the public cam- paign-finance system, which was aimed at weeding out political corruption following former Gov. John Rowland's bribery conviction. The program, however, hasn't stopped moneyed-interests from influencing political races, and we don't think taxpayers should have to pay for political campaigns. Connecticut residents and businesses already shoulder enough of a tax burden. n OTHER VOICES Innovators need tools to protect trade secrets By James T. Brett H ere in New England, we pride ourselves on our region's vibrant and thriving innovation economy. Our region is home to a diverse array of innovative busi- nesses representing the information technol- ogy, life sciences, medical device and manu- facturing sectors, just to name a few. For all of these businesses, intellec- tual property is a sig- nificant asset and one that they seek to pro- tect. One of the most valuable categories of intellectual prop- erty for many of our region's innovators is trade secrets. In fact, the trade secrets of U.S. publicly listed compa- nies alone are worth approximately $5 trillion. Trade secrets can include a wide range of information, including manufacturing pro- cesses, product development, source code, industrial techniques, formulas, pricing infor- mation and customer lists. Protecting this form of intellectual property is absolutely critical to driving innova- tion that is so key to continued economic growth and global competitiveness. Un fo r t u n a t e l y, innovators in our region are increasing- ly the target of sophis- ticated efforts to steal trade secrets. While there are currently various state laws in place to address the theft of trade secrets, there are cur- rently not adequate measures in place at the federal level to address the interstate and international nature of trade secret theft in the 21st century. This is particularly problematic here in the New England region where it is incredibly easy for a party who has stolen trade secrets to move quickly across state jurisdictional bor- ders. Companies that own trade secrets need access to a federal civil remedy and the same legal options that are currently available to the owners of other forms of intellectual property, such as patents, trademarks and copyrights. Earlier this year, bipartisan legislation to close this gap in the law, The Defend Trade Secrets Act of 2015, was introduced in both the U.S. Senate and the U.S. House of Repre- sentatives. The legislation has a long list of co- sponsors from both sides of the aisle, includ- ing many New Englanders. Recognizing the importance of this issue to our region, Sens. Kelly Ayotte (R-N.H.) and Richard Blumenthal (D-Conn.), as well as Reps. David Cicilline (C-R.I.), Joseph Kennedy (D-Mass.) and Peter Welch (D-Vt.) have all signed on as co-sponsors. The Defend Trade Secrets Act of 2015 would establish a federal civil right of action for businesses to protect trade secrets in U.S. federal courts. It would provide a con- sistent, harmonized legal framework and help minimize the commercial injury and loss of employment that can result when trade secrets are stolen. A federal civil right of action will also eliminate the complicated and costly process of pursuing legal action across multiple state jurisdictions. In addition to strong bipartisan support in Congress, this bill has also won the sup- port of numerous businesses and trade asso- ciations representing a wide range of indus- tries, including The New England Coun- cil. Our region is home to some of the nation's and world's most cutting-edge, innovative compa- nies, all of whom play a significant role in the region's eco- nomic well-being. It is critical that we provide these inno- vators with the tools to protect their intel- lectual property so that they can con- tinue to grow, and we are hopeful that Congress will do just that by passing the Defend Trade Secrets Act. n James T. Brett is the president and CEO of The New England Council, a non-partisan alliance of business and organizations throughout New England that advocates for federal policy that promotes economic growth in the region. HARTFORDBUSINESS.COM POLL This holiday season, will you spend more or less compared to last year? ● More ● Less ● Same To vote, go online to HartfordBusiness.com. Last week's poll results: Should the state sell some of its Hartford properties to bolster the city's tax rolls? 66.7% Yes 33.3% No James T. Brett OPINION & COMMENTARY ▶ ▶ One of the most valuable categories of intellectual property for many of our region's innovators is trade secrets. In fact, the trade secrets of U.S. publicly listed companies alone are worth approximately $5 trillion. 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.

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