February 18, 2019
Editor's Take

Democrats send mixed messages to biz

Greg Bordonaro Editor

There is a tale of two Democratic parties in Connecticut right now and it's unclear how the business community will respond to the mixed messaging.

On one side you have Gov. Ned Lamont, an entrepreneur and optimist who has made economic development and creating a more business-friendly environment a top priority.

On the other side you have a Democratic-controlled state legislature determined to pass myriad policies that are anathema to some in the business community.

Lamont has tapped key private-sector executives to run various functions of state government, from economic development to administrative services, with the hope of developing more public-private partnerships, streamlining bureaucracies and changing the negative perceptions of the state.

He's already pledged to eliminate the pesky $250 business-entity tax and rebrand Connecticut.

Meanwhile, House and Senate Democrats have united to back legislation that will mandate paid family and medical leave and a $15-per-hour minimum wage. Highway tolls are also likely.

Oh, did I mention Lamont also supports these policies?

What does this all mean? Democrats are sending an incoherent message to the private sector. The cost of doing business in Connecticut will surely rise by the end of this legislative session, meaning Lamont, as leader of the Democratic party, will have a difficult time convincing employers that things are truly changing for the better.

It doesn't matter how many top executives Lamont has in his corner to help sell the state, or what new economic-development programs he unveils, what small- and midsize companies care most about is operating in a stable and affordable business environment.

Paid family medical leave and a $15 minimum wage are both noble causes, but they will be an added burden to some employers, even though workers will largely be footing the bill for a medical-leave program and an increasing number of companies are already adopting the higher wage level.

Many employers support giving workers time off to care for a new baby or seriously ill family member, but a one-size-fits-all government-mandated approach may not work for some companies.

Add in tolls and the threat of recession this year or next, and it's hard to see how businesses will be bullish about hiring or investing here.

And the fact that other states are also adopting these more generous worker benefits isn't a valid excuse for Connecticut to follow suit, at least not right now. It actually presents an opportunity for the state to distinguish itself from other high-cost locales like New York and New Jersey.

Lamont's best bet to instill business confidence will be to come up with a state budget that provides long-term stability, without soaking businesses and residents with significantly higher costs.

That too will be a challenge. When he presents his budget Feb. 20, the first-year governor will have to tackle multibillion-dollar deficits. His solution must lead with cutting costs and asking state employee labor unions for more givebacks.

If he fails to pursue either of those fronts, getting private-sector buy-in will be difficult. He also needs a long-term solution to the state's surging retirement-benefit costs.

So far, Lamont has hinted he will take a moderate approach to the budget, asserting in an open letter to residents that the state should brace for a lean two-year spending plan that restructures pension debt and lowers annual borrowing (both good things) and broadens the sales tax by removing certain exemptions related to the digital and service economy.

That could be a reasonable tactic to raise new revenues, but why not lead with ways in which he will further shrink the size and scope of government? Instead, all Lamont promised was that he'd "hold the line on the operating budget."

The good news is, no budget has been proposed yet and no bills have been approved by the legislature. So we should all give Lamont a chance to prove himself.

But a positive tone and outlook alone won't convince businesses that this state is headed in the right direction. It's policy actions that promote growth and encourage investment that will.

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