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Connecticut business survey faults taxes, regulations as barriers to growth

The Connecticut Business and Industry Association and BlumShapiro released Friday their annual survey of businesses in Connecticut, showing state taxes and regulations are the biggest roadblocks to business growth and expansion.

The three biggest challenges to growth cited by the businesses surveyed were costs associated with state regulations, taxes and “unpredictability surrounding legislative decision making.”

Interestingly, two focal areas of the current political debates – transportation and broadband access – ranked as the bottom two barriers to business growth.

Decisions on whether to grow their operations in Connecticut or elsewhere were in a virtual tie with 47 percent of surveyed businesses said they will continue to invest in Connecticut while 46 percent said they were looking to set up operations elsewhere.

Zero respondents reported that they were trying to bring out-of-state operations back into Connecticut.

“Almost 40 percent of this year’s respondents plan on selling or transferring their business in the next 10 years,” Thomas A. DeVitto, Chief Marketing Officer at BlumShapiro, wrote in the survey report. “It’s imperative that we have a comprehensive strategy focused on keeping these businesses in our state. Creating a favorable tax and regulatory environment, retaining talent and developing a strong workforce with proper skills will need to be key elements.”

The survey is another in a long list of state and national surveys that have faulted Connecticut’s high tax and regulatory burden as a problem for the state’s fiscal health. Two major tax increases under Governor Dannel Malloy’s administration have resulted in massive deficits, leading to public employee layoffs and cuts to state services.

Compounding the effects of taxes and regulations is the outmigration of both residents and businesses. Of the businesses surveyed that were considering relocating out of state 45 percent cited the high cost of doing business followed by 19 percent who said there were better incentives elsewhere.

The survey results come on the heels of Yankee Institute’s Connecticut Can Work! campaign, which lists a series of no-cost government reforms to ease the regulatory burden of the state. Reforming occupational licensing, unemployment insurance and reducing barriers to independent contractors are all included in the reform ideas.

The CBIA recently announced that it is ear-marking $415,000 to back candidates in the next state election who support their pro-growth agenda. “We’re here to represent the business community and we look at someone who votes for higher taxes and labor mandates,” CBIA president Joe Brennan told the Hartford Courant. “If they consistently vote against our positions, I don’t think we have to apologize for supporting people who are for our positions.”

Connecticut has continued to experience slower growth than its neighbors since the recession in 2008 and 2009 and has yet to fully recover the jobs lost during that time.

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Marc E. Fitch

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