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CT Food Association: Tolls, Minimum Wage, Paid FMLA, Soda Tax “Potentially Devastating”

Wayne
Pesce, president of the Connecticut Food Association, says the combination of
tolls on Connecticut’s highways, an increase to the state’s minimum wage and
imposition of paid family medical leave program could be “potentially
devastating” for its members.

Between a pending 50 percent mandated wage increase, a paid family medical state mandate, pending Eversource energy rate increases, a proposed $160 million sugar tax and tolls that drive supply chain costs up, we feel under siege

“Between
a pending 50 percent mandated wage increase, a paid family medical state
mandate, pending Eversource energy rate increases, a proposed $160 million
sugar tax and tolls that drive supply chain costs up, we feel under siege,”
Pesce wrote in an email.

The
CTFA represents 240 companies in the state with a combined 435 food and
pharmacy retail stores employing 30,000 people.

“Each
of these measures individually are concerning – combined they are potentially
devastating,” Pesce wrote.

CTFA
members occupy a big chunk of Connecticut business. According to CTFA, they
have $5.7 billion in sales per year, but the industry operates on slim profit
margins – typically 1 to 1.5 percent, leaving little room to absorb large cost
increases.

Democrat
leaders in the legislature have made tolls, increasing the minimum wage to $15
per hour and implementing a paid family medical leave program part of their top
five agenda items for the legislative session.

Gov.
Ned Lamont, likewise, has made those issues top priorities as part of his budget. Lamont campaigned on being business-friendly, but business
organizations have fought the minimum wage increase and the paid FMLA program
for several years.

The
governor’s budget — and bills circulating in the legislature — would
institute a .5 percent tax on employees, allowing them to take up to 12 weeks
per year for family medical leave with payment up to $1,000 per week and
increase the minimum wage from $10.10 per hour to $15 over the next three
years.

Both
measures contain costs for the state at a time when Connecticut faces on-going
budget deficits. In his budget, the governor estimated the paid FMLA program
would cost $5 million to start but estimates of previous bills by the Office of Fiscal Analysis placed start-up costs at $13.6 million.

Last
year, OFA estimated increasing the minimum wage to just $13.50 would increase
state labor costs by $45.3 million and also raise costs for municipalities.

But
the costs for Connecticut companies, particularly grocery stores which
typically pay check-out clerks and sales associates less than $15 per hour,
will see their labor expenses grow much more significantly and that cost will
be passed on to the consumer in the form of higher prices.

The minimum wage increase
may also affect employment at those grocery stores. Opponents to the

minimum wage increase have long pointed out that rising automation in the form of self check-out aisles at grocery stores mean that stores facing higher employment costs can more easily afford to cut staff.

That
argument is weighing on at least one major grocer in the state — Stop &
Shop. Stop & Shop is currently in negotiations with its employee unions and
several have already held votes to authorize a strike after accusing the company of trying to cut employee
benefits.

Radio
advertisements run by the United Food and Commercial Workers International
decry the store’s use of self check-out lines.

Lamont
balanced his budget by adding a tax on sugar-sweetened beverages and a
surcharge on plastic grocery bags. Combined the two measures are expected to
bring in $193 million but put further pressure on grocery stores and beverage
distributors.

Lamont
and Democratic leaders’ push for tolling Connecticut highways will not only
raise the day-to-day cost of living for Connecticut residents driving on
highways, but also increase the cost of shipping goods like groceries into the
state.

Connecticut
trucking companies say tolls will cost them hundreds of thousands per year – a cost they will be forced to pass on to
their customers, including food retailers.

Much
of Connecticut’s policy debate focuses on the wealthiest residents, the
financial sector and hedge fund companies which account for a significant chunk
of Connecticut tax revenue.

Well
publicized departures of major investment firms and billionaires like Paul Tudor Jones have not only shown the financial services industry
to be more mobile in the age of wireless technology but have also made
lawmakers more nervous about the effect tax increases will have on the
financial sector.

Testifying
before the Finance, Revenue and Bonding Committee against a proposed 19 percent
surcharge on financial services in 2017, head of the Connecticut Hedge Fund
Association Bruce McGuire told lawmakers his members would just leave.

But
for retail outlets like grocers, pharmacies and other companies which rely on
foot-traffic, moving out of state is often not an option.

Brick and mortar stores do not have the luxury of relocating our stores to a more business friendly climate

“Brick
and mortar stores do not have the luxury of relocating our stores to a more
business friendly climate,” Pesce said, making them a less mobile target for
tax and cost increases.

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Marc E. Fitch

  1. Russell Phillips

    March 2, 2019 2:42 am

    They certainly are not making it easy on CT citizens , but this is what the voting majority wants. I am actively looking at an out of state relocation.

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