Hartford Business Journal

6 Hartford Business Journal • May 8, 2017 www.HartfordBusiness.com TOP STORY CT's tax revenue plunge bottoms out at $1.5B Connecticut's latest budget nightmare became reality last week. Analysts for Gov. Dannel P. Malloy's administration and the legislature's non- partisan Office of Fiscal Analysis downgraded anticipated revenues for the next two fiscal years by $1.46 billion — nearly $600 million next fiscal year and $865 million in 2018-19 — largely because of eroding income tax receipts. Projected revenues now fall $2.2 billion, or 11.3 percent, short of the funding needed to maintain current services in 2017-18. And with the po- tential deficit swelling to $2.7 billion, or 13.6 percent, in 2018-19, the bien- nial shortfall approaches $5 billion. Further complicating matters, revenues for the current fiscal year are $413 million below anticipated levels. This pushes state finances more than $380 million in the red and threatens to deplete the $236 million in the emergency budget reserve with less than nine weeks remaining before June 30. Meantime, while insisting he remains very sensitive to the economic risks posed by another state income tax increase, House Speaker Joe Aresimowicz (D-Berlin) said last week he would not rule out another hike — including one on wealthy households — given the massive deficits projected for state finances. Aresimowicz also urged other lawmakers and Gov. Dannel P. Malloy to focus on a plan to stabilize state finances over the long term. "I still refuse to enter the negotiations taking anything off the table," Aresimowicz said, noting that neither party nor branch of government has offered a plan to date that comes close to solving the budget crisis. – Keith Phaneuf | CT Mirror PROFESSIONAL SERVICES NY's Marcum grows CT footprint with acquisition Regional accounting firm Marcum LLP, which has a Hartford office, said last week it has acquired a New Haven CPA firm that will add to its Connecticut presence. Marcum, which is based in New York, has acquired Meyers, Harrison & Pia LLC and Meyers, Harrison & Pia Valuation and Litigation Support LLC (MHP), adding 55 partners and staff. Terms of the deal were not disclosed. Founded in 1954 in New Haven, with offices in Portland, Maine, MHP is a full-service CPA firm. Anthony Scillia, partner-in-charge of Marcum's New England region, said of- fices in New Haven and Maine will add to Marcum's presence in Hartford and Greenwich, Boston and Providence. ECONOMY & LABOR Report: CT's employment recovery worst in the Northeast Connecticut has the slowest economic recovery rate in the Northeast, ac- cording to the Connecticut Department of Labor. In its latest economic digest, the state Department of Labor highlights the state's job growth since the Great Recession, during which time Connecticut has regained only 74 percent, or 91,200, of the 119,100 jobs lost. That's more than 23 percentage points below its nearest Northeast com- petitor, the state of Maine, according to CTDOL and the U.S. Bureau of Labor Statistics. Connecticut, which had 1.7 million jobs at peak employment in March 2008, had more than 1.6 million jobs as of Feb. 2017, according to the report. Massachusetts has a recovery rate of 293 percent, and New York's recovery rate is the highest in the region at 307 percent, statisticians found. Overall, the U.S. has a 184 percent jobs recovery rate. TRANSPORTATION Study: Upgrading central CT rail could boost freight capacity Connecticut has the ability to double its freight service capacity in central Connecticut if millions of dollars are spent repairing the system, but upgrading to passenger service is cost-prohibitive, a new study has concluded. The state Department of Transportation (CTDOT) study estimates demand for freight usage will grow from up to 1,800 annual carloads to between 2,800 and 3,100 carloads if rail line repairs are made. The central freight corridor serves the cities of Waterbury, Bristol and New Britain and nearby towns of Plainville, Berlin and Plymouth. The existing rail line is defined as a single track running approximately 24 miles, with maximum speeds of 25 mph (class 2), though some sections of track operate at only 10 mph (class 1). Total costs for upgrades range from $140 million for class 2 rail, with speeds of up to 25 mph, and $170 million for class 3 rail, with speeds of up to 40 mph. But adding passenger service to class 3 rail could cost between $410 million and $530 million, the study found. Passenger rail also is not viable because of likely low ridership and difficulties in upgrading the Terryville Tunnel, the study states. MANUFACTURING Report: CT a costly place for advanced manufacturers Connecticut is one of the most expensive states in the U.S. to operate an advanced manufacturing plant, according to a new analysis from online com- parative business relocation costs specialist BizCosts.com. The report from BizCosts.com, which draws from data provided by New Jersey location consultancy The Boyd Company Inc., analyzes all major geo- graphically-variable operating costs critical to the corporate site selection de- cision, including labor, taxes, construction, real estate, shipping, utilities and other factors. The analysis compares states based on the operating costs for a 225,000-square- foot plant that employs 500 workers, but does not include startup or relocation costs. A company that size in Connecticut has average annual operating costs of $38.6 million, second highest in the country behind New Jersey, the report said. The low- est-cost state is South Carolina, at $30.1 million. Of the annual costs analyzed, a plant in Connecticut would cost $24.8 million in base payroll to run, with another $9 million for fringe benefits. HEALTH CARE New CHC $17M 'Knowledge Center' breaks ground The Community Health Center Inc. (CHC) broke ground last week on its new $17 million Knowledge and Technology Center in Middletown. The three-story, 30,000-square-foot building will house information tech- nology, telehealth, communications, human resources and other support func- tions for CHC's statewide primary care network. The building also will house the Weitzman Institute and its research and workforce development initiatives. GOVERNMENT Small biz hotline bill passes House A bill that would require state officials to staff a hotline to advise and assist small business owners on business concerns passed the House last week. H.B. 5584 would require the Connecticut Department of Economic and Com- munity Development to set up the hotline by Oct. 1. During business hours, DECD staff would guide entrepreneurs on how to launch a business, develop it, network, access resources and get other technical and financial assistance from state and quasi-public agencies. The Senate and governor have not yet considered the bill. 5 Card Cash game was a problem from the start, officials say State officials revealed last week during a Public Safety Committee informa- tional meeting that Connecticut Lottery leaders did not inform the Department of Consumer Protection of the potential risk of fraud associated with the 5 Card Cash game, despite knowing of the issues before rolling it out. The game was similar to a scratch ticket in that it provided players the op- portunity to win instantly. Unlike scratch tickets, however, 5 Card Cash was distributed through lottery terminals at retail stores. This enabled clerks to print a ticket and see whether it was a winner prior to handing it to the customer. It was determined that some retailers were keeping the winning tickets without the players' knowledge, a practice known as "palming." – Eric Bedner | Journal Inquirer BY THE NUMBERS 91,200 The number of jobs Connecticut has added since 2008, which represents only 74 percent of the 119,600 jobs lost during Great Recession, according to the U.S. Bureau of Labor Statistics. $230,000 The median price for a single-family home sold in Connecticut in March, up 2.2 percent from a year earlier, according to the Warren Group. 2,207 The number of single-family Connecticut homes sold in March, up 1.9 percent from the year-ago period, according to the Warren Group. $5B Connecticut's approximate projected deficit for the next two fiscal years, which has grown from a previously estimated $3.6 billion deficit. TOP 5 MOST READ on HartfordBusiness.com ■ Report: CT's employment recovery worst in the Northeast ■ NY's Marcum grows CT footprint with acquisition ■ CT's tax revenue plunge bottoms out at $1.5B ■ Report: CT a costly place for advanced manufacturers ■ House Speaker: Deficit too great to rule out income tax hike STAY CONNECTED For breaking and daily Greater Hartford business news go to www.HartfordBusiness.com. HBJ on Twitter: @HartfordBiz HBJ on Facebook: www.facebook.com/HartfordBiz HBJ on LinkedIn: www.linkedin.com/company/ the-Hartford-Business-Journal Daily e-newsletters: HBJ Today, CT Morning Blend www.HartfordBusiness.com/subscribe Weekly e-newsletters: CT Green Guide Weekly, CT Health Care Weekly www.HartfordBusiness.com/subscribe WEEK IN REVIEW House Speaker Joe Aresimowicz says raising taxes is no longer off the table after the state's budget deficit worsened last week. P H O T O | C O N T R I B U T E D

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