|
|
|
That’s a Wrap
Business leaders say new laws will help exconomy, create jobs
|
Business New Haven
7/13/1998
By: Marci Alborghetti and Jennifer M. Gangloff
|
Business and state leaders say they are pleased overall by the 1998 legislative session, noting that a number of what they characterize as anti-jobs bills were defeated, that some environmental regulations will be clarified and that the vocational-technical school system will be overhauled.
“It was a continuation of what has been done in the last three years,” Gov. John G. Rowland said. He also noted that there weren't any efforts to appeal the phase-down of the corporate income tax, that money was set aside to roll out the state's cluster initiative in earnest and that consumers will be getting a tax rebate this summer, a windfall that will inject up to $115 million into the economy.
Some bills that finally made it through this session had been advanced in the past, including energy deregulation. Many of the bills, business people said, would help put Connecticut on a more even playing field with other states that have traditionally have had more business-friendly tax and regulatory environments.
“Legislative initiatives this year - coupled with the actions of the administration and the legislature in the past few years - will help strengthen our economy and provide a business climate in which opportunities are available and young people can find careers,” said Connecticut Business & Industry Association President Kenneth O. Decko.
And it's not just the cheerleaders who are cheering about the '98 session. Said economist Ed Stockton, president of Stockton Associates: “I may be an optimist, but I'd say it's been a good session for two specific reasons: the economy is at its peak and the governor's seeking re-election. There's lots of money now in the economy, and that makes it easier to do a good job.
“But, from a business perspective, they could have done more for manufacturing,” Stockton added. “Granted, they passed some nice little bills, but Connecticut's personal property tax is still very high, relative to competing states. People forget that manufacturing is still very important to Connecticut, and our leaders don't do enough to support this industry.”
Michael Meotti, president of the Connecticut Economic & Policy Council (CPEC), concurred, though he changes the focus slightly.
“Right now, Connecticut has to do more to make our tax structure fully competitive with other states in the nation,” Meotti said. “This is particularly true in the tax treatment of start-up businesses. These are the high-tech companies that are vital to this state.”
Okay, so what about the good things?
n Energy Restructuring
Opening the state's electric industry to competition was the top issue for many lawmakers and business leaders. While critics were concerned about environmental impacts and said anticipated consumer savings might never be realized, a CBIA study showed that reducing rates ten percent would pump $488 million into the economy.
“It's going to make Connecticut more competitive, it's going to save everybody money and it's going to save many of our residents their jobs and eventually provide more jobs,” said George Wilson, executive director of the Coalition for Deregulated Electricity. “That's the beauty of it.”
But the issue remains short of final resolution, Wilson noted. Restructuring must be implemented to ensure that estimated savings are met. While the coalition was created specifically to help get the law passed and now will essentially be disbanded, Wilson said he and others will keep an eye on upcoming hearings before the state's Department of Public Utility Control and other action. “I want to make sure we see it implemented as most people thought it was going to be,” he said.
Rita Bowlby, vice president of corporate affairs for the United Illuminating Co., allowing that dereg is on balancepositive for the state and its businesses, believes that the hardest work lies ahead.
“We all wanted a bill that would be positive for our customers, and I believe we were successful in working with the legislature to get a good bill,” said Bowlby.
“We've worked on this legislation for over three years, and now we're busy making sure we meet all the requirements. There's a lot to be done yet, but basically, competition will always be positive for our customers,” said Bowlby.
Rowland, too, was pleased that the bill was passed this year. “I had hoped it would pass last session,” he said. “Ninety-nine percent of the work was done last year.”
n Repeal of the sales tax on repair, replacement and enhancement parts for manufacturing
Opponents of this tax say its repeal, effective January 1, 1999, will help businesses make capital investments. While the net effect will be a tax reduction for manufacturers, Frank Johnson, executive director of the Manufacturing Alliance of Connecticut Inc., said that is not the reason businesses - or even state officials - wanted the tax repealed.
“It was a very confusing issue for compliance for both manufacturers and the state Department of Revenue Services,” Johnson said. “It's difficult to report accurately what was owed on sales tax and it was difficult for Revenue Services to go in and try to do audits. It was just a compliance nightmare.”
n Vocational-technical Schools
While the vocational-technical school system hasn't been formally directed to revamp its curriculum or improve its facilities, new legislation will help upgrade the system and foster public-private partnerships.
For one thing, the University of Connecticut School of Engineering and the Central Connecticut State University Manufacturing Center are required to develop a pre-engineering and technologies curriculum to pilot at three voc-tech schools. In addition, the state's community-technical colleges must establish a process to ensure that voc-tech students make a successful transition to higher-education programs. And the voc-tech schools can undergo an independent audit to determine the needs for upgrading buildings and equipment.
In addition, a separate bill authorized $15 million in bonds to upgrade school infrastructure.
Said gubernatorial spokeman Dean Pagani of the reforms, “The voc-tech legislation is very positive in providing that system with more support and direction.”
n Minimum wage
Connecticut workers will see two increases in the minimum wage - increases of 47 cents on January 1, 1999, and 50 cents on January 1, 2000 - bringing it to $6.15 an hour. Businesses grumbled about it, but MAC noted that for most of its member companies, the minimum wage is the prevailing starting wage anyway.
East Haven State Rep. Robert M. Ward (R-86) testified against the bill, calling it “anti-jobs” legislation. The Connecticut Farm Bureau likewise opposed it, saying the increase would cause the entire wage floor to rise and that small family farms can't sustain another increase in the cost of doing business. The Insurance Association of Connecticut said the legislation sends an anti-business message to employers already in the state and could influence those thinking about relocating.
n Corporate responsibility
A series of measures known as “corporate responsibility” bills, spearheaded largely by Columbia State Sen. Edith G. Prague (D-19), essentially fizzled. Among other things, the bills would have held certain companies that receive state grants, loans, tax breaks and similar aid to specified standards of responsibility to employees regarding health-care benefits, non-compete clauses, CEO salary caps, and vacations and sick time. Prague said the bills would target larger companies that “shove around” their employees, but critics said it would hurt businesses across the board and make Connecticut less competitive.
“We felt it sent the wrong message to people about doing business in Connecticut,” MAC's Johnson said.
Also rejected was a measure that would have repealed a 1993 limit on discretionary benefits for workers compensation claimants and another bill that would have required employers to reinstate injured employees to their jobs regardless of how long they had been out. Those bills would have hurt the reforms made in the workers comp program, CBIA said.
n Cluster initiative
Connecticut Innovations Inc. (CII), the state's technology development agency, was given broader authority to help fund the construction or renovation of lab space, which is expected to give the state's emerging biomedical and biotech industries a substantial boost.
In addition, research and development tax credits were expanded, allowing most companies to take advantage of the six-percent R&D credit.
That measure was actually part of tax legislation but was raised by the cluster initiative. “It's not as big news as the drop in the corporate income tax, but it's significant to the individual companies and individual industries,” said John Rathgeber, CBIA's executive vice president. “Clearly, the research and development tax credit puts us on par with other states like Massachusetts and New York, so we're not at a disadvantage for making research and development investments in Connecticut.”
n Child labor
With certain exceptions, students under age 18 are barred from working more than 32 hours a week while school is in session. Some businesses, such as Stop & Shop supermarkets, testified during hearings that “Employment decisions for minors should rest primarily with the family.” Other critics said limiting teen work hours could hurt small businesses trying to survive in an expensive business climate.
n Other bills:
Early literacy campaigns got a big boost through legislation that will help educators identify at-risk students and make sure that all public school students develop reading skills no later than the fourth grade by requiring intervention efforts such as after-school and summer-school programs.
The corporate income tax was eliminated as it applies to domestic insurance companies that pay a premium tax.
Financial services companies can operate under a single-factor apportionment formula, which means they will be taxed only on income on sales to Connecticut residents.
The state's Department of Environmental Protection will be required to explain why and how its proposed regulations would differ from federal standards - an effort to reduce the confusion and inconsistency between state and federal regulations that can thwart business.
New permits for asphalt plants will not be issued for two years.
Banks will not be barred from charging non-customers for using their ATMs.
Insurers won't be required to cover prescription birth-control measures.
State politicians will be prohibited in 1999 from accepting unregulated campaign cash, known as “soft money,” which trickles down from national parties.
Fianlly, Rowland spokeperson Pagani also suggested that economically-positive environment in the state contributed to “a tax package that secured bonding approved for projects that will improve and enhance” Connecticut's three largest and poorest cities: Bridgeport, New Haven and Hartford.
Still, Ed Stockton is not so sure that the focus should be so narrow, or the scope so local, when it comes to the future state of the state. Observing that Connecticut's cities need more than money, he said, “Throwing bond money at cities won't solve the underlying problems; we need major policy initiatives.”
All in all? “The changes that were made accomplished both what the legislative agenda was and what the manufacturing agenda was,” Johnson said. “It turned out to be a very positive session.”
Rathgeber agreed. “I think we continued to improve the business climate, which is not only better for businesses but for the people of Connecticut as well,” he said. “There's nothing like adding jobs to improve the standard of living.”
But as Stockton and Meotti - both of whom remain cautious despite their general approbation - believe, Connecticut has more to do if it is to sustain the positive momentum. Meotti summarized: “I'd say it's been a good session in terms of business and economic development, but it's not a breakthrough session. We still have a way to go.”
As for what the next session will bring, it's still too early to tell, Rowland said. “But we do want to hold the line on growth in state spending,” he added.
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
