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February 1, 2016 Focus: State Government

2016 business-policy issues to watch

PHOTO | Pablo Robles Members of the legislature's tax panel listened to various constituents, including Joe Brennan of the Connecticut Business & Industry Association, about tax changes they'd like enacted.
PHOTO | HBJ File Several towns including East Windsor and East Hartford are vying to land the state’s third casino in their backyards.
PHOTO | Contributed Tesla, whose electric vehicle is shown above, is pushing the state legislature to allow it to sell directly to consumers.

Prior to each legislative session, the nonpartisan Office of Legislative Research (OLR), in consultation with the Office of Fiscal Analysis (OFA) and Legislative Commissioners' Office, puts out a report identifying important issues the General Assembly may tackle. The Hartford Business Journal picked out some of the issues discussed in the report that could impact businesses in the four-month session that begins this week.

Local government fiscal pressures:

A number of groups have been examining policy options to address the rising cost of providing local services and the uneven distribution of the property tax base across the state, which creates significant fiscal imbalances among cities and towns. In 2016, the legislature may consider policy change recommendations from the General Assembly's tax panel and other groups, which could include proposals to diversify municipal revenue sources, improve property tax administration, adjust state grant funding formulas to equalize fiscal disparities across municipalities, and encourage cities and towns to cut costs by collaborating on activities and delivering services regionally.

Paid family and medical leave:

Last session included an unsuccessful bill that would have expanded protections under the state's family and medical leave law to all employees. Current law exempts manufacturers and companies with less than 75 employees. Lawmakers opted to ask the state's Labor Department to craft a plan for implementing a paid family and medical leave program and to actuarially determine the employee contributions needed to ensure financial sustainability. That report is due this week, OLR noted, and it will be up to the legislature on how it acts on the recommendations.

Digital taxes:

One proposal that's been on the table in several recent sessions is new or expanded taxes on digital goods and services. Last year lawmakers voted to raise the sales tax on data processing and computer services from 1 percent to 3 percent, drawing the ire of insurance companies and others. The tax, however, didn't make it through a special session in late June.

OLR said in its report that possibilities this year, or in future sessions, might include expanding the range of services and digital goods subject to sales and use tax, launching efforts to better capture sales and use tax from out-of-state sellers and taxpayers, and considering potential tax streams from evolving business models, such as cloud computing and virtual currencies.

Zero-emissions vehicles:

During the 2015 United Nations Climate Change Conference in Paris, 13 European and North American governments, including Connecticut, announced their intention to make all new passenger vehicles in their jurisdictions zero-emissions vehicles (ZEVs) by 2050. Connecticut and six other states have also committed to putting a combined 3.3 million ZEVs on the roads by 2025.

Given those pledges, OLR predicted that lawmakers may consider proposals to further encourage ZEV adoption, such as sales tax waivers and free access to travel lanes and parking in some locations.


Last year lawmakers passed a bill that partially paved the way for a joint venture of the Mohegans and Mashantucket Pequots to construct a third Connecticut casino. The effort will need additional legislative action, OLR noted, thought it wasn't clear as of late last week whether the joint venture, called MMCT, would be ready to decide where it wants to build a new gaming center. MMCT said in December that it needed more time to work out a site selection deal with one of several contending communities.

Following recent developments in New York, where there has been a crackdown on fantasy sports wagering, OLR said Connecticut may also seek to determine if such websites are legal in this state, and if so, whether they should be regulated and taxed.


An attempt to regulate ride-sharing companies like Uber and Lyft, which offer a mobile app that allows customers to call for a driver, failed in the Senate last year. Soon after, in August, Uber won dismissal of a lawsuit filed by Connecticut taxi and livery companies, which argue that such services are unfair and unregulated competition. OLR said the legislature may consider ride-sharing regulation again this year, and that recent changes in the ride-sharing business model — including a new carpooling model and the expansion of liability insurance options — may play a role.

Reverse Mortgages:

In the 2015 legislative session, a bill that would have subjected reverse-mortgage lenders to counseling requirements, died in the Senate. The matter may arise again this year, OLR said.

Other issues

OLR didn't mention the following issues, but they're likely to come up, based on recent comments from policymakers.

Public-retirement plan: Senate President Pro Tem Martin Looney and Comptroller Kevin Lembo appeared at a rally last month with AARP officials supporting the creation of a public-retirement plan. The Retirement Security Board has been studying the proposal for the past two years. Republicans and the Connecticut Business & Industry Association oppose the plan, saying it would compete with private financial services companies.

Tesla to try again: High-end electric vehicle manufacturer Tesla announced in November that it would be back for a second try at convincing Connecticut lawmakers to allow it to sell its vehicles in the state directly to customers, rather than through dealership franchises. The measure was opposed by auto dealers, who say their business model offers more consumer protections.

Prevailing wage: Senate Minority Leader Len Fasano (R-North Haven) said he wants to increase the wage threshold for the prevailing wage to save towns and cities money. Prevailing-wage laws require workers on public works construction projects to receive the same wage that is customarily paid for the same work in the project's town. Currently, Connecticut's prevailing wage kicks in when a public works project's contract value meets or exceeds $400,000 for new construction and $100,000 for remodeling. Last year, Republicans tried increasing those thresholds to $5 million and $2 million, respectively, but failed.

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