Lobbyist Update - Spring 2008 - Gov. Rell Calls For Fiscal Caution
Governor M. Jodi Rell opened the 2008 Session of the General Assembly on February 5 by calling on Legislators to use fiscal caution and restraint in order to avoid making the situation any more precarious.
Her midterm budget adjustment calls for a revised $18.5 billion state budget for fiscal year 2009 (beginning July 1, 2008), about $89 million more than the budget approved last year. Spending will increase largely because of higher than expected health care and energy costs, as well as the cost of criminal justice reforms recently adopted by the legislature. But total expenditures in the Governor’s proposal are under the state’s spending cap.
Lawmakers and the Governor agreed on a two-year, $36 billion budget in 2007 and in this three-month session will make changes to the second year of that package.
The Governor focused mainly on economic growth, public safety, criminal justice reform, human services and transportation reform in her state-of-the state address. Of particular interest to business were her calls to eliminate the $250 business entity tax and create a
“green” corporate tax credit.
Additional proposed budget changes from the Governor that will directly or indirectly effect Connecticut businesses:
• Reorganization and restructure of the Department of Transportation (DOT) into two agencies; one for highways and one for trains, airports and mass transit. There would also be a new chief operating officer for DOT operations, and a new office of strategic planning and evaluation.
• Grants to universities to enhance collaboration between industry and academia for bioscience and nanotechnology careers
• Loan reimbursements to engineering graduates who choose to work in Connecticut
• Creation of a vocational-technical school program in “green collar” technical jobs
• Some sales tax relief for energy efficiency efforts
• Support for the alternative route to certification for early-childhood teachers and
• Continued support for affordable housing programs.
Property Tax Cap
The Governor also reissued a call for property tax reform, including a
modified property tax limit of 4 percent phasing down to 3 percent by
July 2011. Her proposal is coupled with a mandate-relief package for municipalities that includes a moratorium on new mandates unless approved by two-thirds of the legislature and a call to raise the threshold for projects covered by the prevailing wage to $1 million for new projects and $500,000 for repair projects.
Lawmakers Unveil Session Plans
Each of the Legislature’s four main political caucuses have agendas for this year’s General Assembly that focus on helping the economy grow and making sure businesses and residents weather the economic downturn. Most significant for the carwash industry is that both sides of the aisle are proposing the elimination or suspension of the state’s $250 business entity tax.
Senate Democrats
The majority caucus in the Senate is proposing an “emergency relief plan” of more than $200 million in targeted, one-time tax cuts and assistance to low-income families and small businesses, including a one-year moratorium on the $250 business entity tax. They also want to increase the property tax credit to $250 per property taxpayer, implement a refundable state earned income tax credit, provide additional help to those with sub-prime mortgages, and increase funds for energy assistance through Operation Fuel.
House Democrats
Majority House Democrats are focused on proposals to modify property taxes, expand government-run health care, and encourage economic growth and job creation. Their health care proposals include continued investment in prevention programs, but they also want to promote health care “pools” for municipalities which is a direct precursor to a government-run system in Connecticut. A plan offered by a group of centrist Democrats in the House, however, would strengthen the state’s current combination of employer-based and existing government programs.
Senate Republicans
Republicans in the Senate are proposing to expand the state’s job creation tax credit to all businesses from its current threshold of companies with 10 or more employees. They also want to immediately repeal the business entity tax and extend the state’s movie industry tax credit to emerging industries such as alternative energy, optics and photonics. In order to improve the business climate in the state, they are proposing “bringing business sense to regulation” by calling on the state to conduct a cost-benefit analysis of all existing regulations every five years.
House Republicans
House Republicans are reiterating their call to eliminate the business entity tax and bring property tax reform. They are also introducing proposals for targeted middle-class tax relief for home heating assistance and health care coverage. Most of the state’s expected budget surplus this year would be directed to provide an income tax credit of up to $500 per household for home heating assistance, and a similar $500 income tax credit would apply to out-of-pocket medical costs.
Energy efficiency ‘Challenge’ made to businesses
The Connecticut’s Energy Conservation Management Board (ECMB) is developing a pilot program that will challenge commercial and industrial customers to make energy efficiency a regular part of their business practices and corporate culture.
Developed by the board’s Commercial and Industrial subcommittee, the “Business Energy Challenge” program is designed to be a collaboration between business customers and their utility company. In the program, the utility will provide services and guidance to the business through customized packages, the coordination of existing efficiency programs, and consulting and general support. In return, participating businesses will commit to work with their utility in the program and invest resources into energy efficiency.
The idea behind the program is to encourage small and midsize operations to adopt energy efficiency as part of their business models. Ultimately, the Business Energy Challenge will prepare businesses to make energy efficiency a sustainable, continuous part of their operations. Contact CCA lobbyist P.J. Cimini if you are interested in finding out more about this program.
New Health Care Tax
One issue that continues to be on the top of everyone’s list of issues that need to be addressed is healthcare. There has been some legislative movement for a new tax on all Connecticut businesses to pay for a special health care fund. The legislature’s Select Committee on Children raised the concept and will soon draft it into a formal bill. While the language of the bill has not been released, the proposal originated from the State Office of the Child Advocate and apparently would impose an annual per-employee (“head”) tax on every business in Connecticut — regardless of the company’s size or whether or not the business already provides its employees with health benefits. Revenue raised would go toward a catastrophic relief fund aimed at children with special health care needs.
Stockpiling Anti-business Proposals
The Legislature’s Labor Committee continues to line up many proposals that will make it much harder and more costly to do business in Connecticut. The committee has heard concepts for proposals that would likely increase workers’ compensation costs; expand eligibility for unemployment compensation; and weaken employers’ ability to manage their employees and operations most effectively. Although proposal language is not yet available for all of the concepts, many of the committee’s new bills on file are consistent with previous years’ attempts to erode the state’s business climate. The Government Affairs Report next week will have more complete information about the committee’s proposals. The committee must finalize and approve bills by mid-March if the measures are to proceed further in the legislative process.
P.J. Cimini, Esq. is the CCA's lobbyist and a partner in Capitol Strategies Group, LLC, in Hartford. You can reach P.J. at 860/293-2581 or click here to email him.
