Hartford Business Journal

20 Hartford Business Journal • May 9, 2016 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL Proactive businesses avoid tax hikes … for now I t appears Connecticut businesses will avoid a tax increase in 2016, an unsurprising outcome from this year's legislative session, despite a nearly billion-dollar budget deficit forcing lawmakers to layoff thousands of state employees and make deep cuts to other services. The looming November elections, in which all General Assembly seats will be up for grabs, clearly weighed heavily on policymakers' minds. Coming off the state's two largest-ever tax increases in 2011 and 2015, there was little appetite among even the most liberal legislative leaders to raise taxes again. It's hardly a time, however, for the business community to breathe a sigh of relief or rest on its laurels. Budget deficits will still likely haunt the state for the next few years, and when the General Assembly convenes in January for their 2017 session, there will be no election hanging over their heads. Calls for raising taxes on busi- nesses and the wealthy will likely reach a fever pitch, particularly in the wake of this year's budget cuts, which are still awaiting final approval in special session (this column went to press May 5). If this session has taught us anything, it's that individual businesses must make their voices heard publicly if they want to significantly influence tax and spending policy in Hart- ford. It was, after all, last year's public outcry from the state's largest corporate citizens — General Electric, Aetna, Travelers, among others — over the prospects of $700 million in new business taxes that set the anti-tax-increase tone for this year's legislative session. GE's decision to move its corporate headquarters to Boston only inflamed that sentiment. But come next legislative session, the sting of GE's departure will have begun to fade in lawmakers' memories. In an era of fiscal uncertainty and turmoil, Connecticut companies can no longer simply rely on paid lobbyists to state their case for a fair, predictable and stable business climate. While it may go against conventional PR-wisdom, publicly voicing dissatisfac- tion with state-level tax policy may be the most effective way for companies to root out proposals that inhibit their growth and investment. Tough choices, outcomes To be clear, no one should be cheering about this year's legislative session. Avoiding tax hikes is a positive, but the significant cuts in state spending will be a drag on Connecticut's economy this year. Also, the state's paltry job growth in recent years (Connecticut only added 12,200 jobs in 2015, down significantly from an original estimate of 27,000) will make it harder for the thousands of laid-off state workers to find new jobs in the months ahead. Indeed, in Connecticut's era of permanent fiscal crisis, there are few good options when it comes to tackling budgets that are structurally deficient. Meantime, the threat from ever-increasing pension and debt costs still looms largely over future budgets. Relying on tax increases, however, to erase red ink has proven ineffective, both in balancing budgets and promoting strong and consistent economic growth. The state has still not recovered all the jobs it lost during the Great Recession, and many of the new positions we have added pay less than the ones they replaced. A new report issued by The Business Council of Fairfield County Foundation showed another troubling sign: The state's population declines in recent years involved consid- erable losses of college-educated residents. The correlation, of course, is that fewer job opportunities lead to fewer highly-skilled people living in the state. While lawmakers opposed tax hikes this legislative session, the threat of future tax increases is only a few months away. That provides little certainty to businesses. If we revert back to tax hikes in 2017, we will continue to erode our advantages over higher- cost states like New York and Massachusetts, and fall further behind lower-cost U.S. and international destinations. That's a recipe for continued economic regression. n HARTFORDBUSINESS.COM POLL Do you have confidence state law- makers will avoid tax hikes in 2017? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Does your company offer an education-reimbursement program? 50% Yes 50% No OTHER VOICES CT should adopt unicameral legislature By Jim O'Neill A t the end of the movie Butch Cassidy and the Sundance Kid, the two are surrounded by the Bolivian Army, but once Sundance assures Butch that he had not seen a particular detective outside, Butch responds, "Oh Good. For a moment there, I thought we were in trouble." Similar confidence to overcome adver- sity wasn't shared by state budget director Ben Barnes last year, when he said Con- necticut has "entered into a period of per- manent fiscal crisis." Few situations are permanent and solutions will almost always fix them, so let's examine what can be done. Even that flood that made Noah a household name receded. So where did our problems start? England! British colonies were established under English law thus giving each state a House of Lords and a House of Commons, though by varying names. State govern- ments kept the British model they were used to, and as a result, we have been living 400 years in the past when it comes to our own state government. Do we need a House of Lords? Nay! We should rid ourselves of the unnecessary appendage we call the state Senate. Unlike New York, California, Florida and Texas with large territories, large popula- tions and diverse interests, Connecticut can be circumnavigated by car in less than a day. What impacts Putnam impacts Greenwich, so why do we need a check on the House of Representatives by a Senate cloaked in more secrecy than Yale's Skull & Bones? With only the House of Representatives to negotiate with, the executive branch can present a budget and only have to get shaken down once rather than twice. Everybody will be able to see who voted for what, bringing long-desired accountability. Since we are changing the state Constitu- tion let us also reorganize how the House of Representatives can operate more efficiently, while providing much less stress for our part- time legislators. First, reduce the number of committees from 27 to 17. Managing so many committee meetings and public hearings while keeping up with the bills is nearly impossible to do. Having legislators more focused will result in better drafted and thought-out bills. Require that the House adjourn at or before midnight unless allowed by a two- thirds affirmative vote. Nothing good hap- pens with exhausted members. Have them convene the session in January and submit bills to the non-partisan legislative attorneys for drafting. Recess until the begin- ning of April, unless sessions are required to confirm nominations or address emergencies. By May, the bills will be fully drafted. The Office of Fiscal Analysis (OFA) should have a reasonably accurate measure of all bills' costs, rather than its all too often "potential cost" anal- ysis. This is another reason the budget has been so out of balance in recent years. Legislators vote bills out of committee without knowing what impact they will have fiscally. In addition, the Office of Legislative Research (OLR) now provides little more than a summary of the bill. It should provide truly researched statements so that lawmakers and the public can fully under- stand the intent and impact of each bill. Like all bureau- cracies, OFA and OLR are terrified of saying anything that will irritate lawmak- ers. After all, they are funded by the legislature. But is it too much for OFA to mention in its analy- sis something like: "Nebraska tried this 10 years ago and the cost went from $1,000 to $500,000 in just five years?" Maybe OLR could check and find out that specific treatments provided in the bill have not been effective elsewhere. Allow the committees to hold public hear- ings in May and June and make whatever changes they deem necessary based on pub- lic input and committee discussions. Then recess again. During this period have the non-partisan legislative attorneys adjust the bills as determined by the committees. They will also draft all amendments for final debate. Reconvene in September to debate all the bills for final action. No last ditch surprise amendments would be allowed. They would not be needed because the bills would have been thoroughly read and understood. Finally, change the state budget cycle to Oct. 1 through Sept. 30, so that it will be aligned with the federal budget. This makes it more accurate to determine federal reimbursements thereby allowing smarter budgeting. Then in 400 years, if this hasn't helped, we can rethink the entire process again. n Jim O'Neill worked for the House Republicans from 1981 to 1986, serving as special assis- tant to Connecticut House Speaker R.E. Van- Norstrand. He was a legislative liaison for the executive branch for more than 25 years. Jim O'Neill ▶ ▶ Why do we need a check on the House of Representatives by a Senate cloaked in more secrecy than Yale's Skull & Bones? 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.

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