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December 21, 2015 5 We Watched in 2015

Brennan’s 2015 was trial by fire

PHOTO | HBJ file

As the recently minted CEO of the Connecticut Business and Industry Association, Joseph Brennan hoped to improve Connecticut's business-unfriendly perception stemming from poor national rankings by CNBC, Forbes and the Tax Foundation.

Instead, CBIA's new chief — taking the reins during CBIA's 200th anniversary year — found himself embroiled in a fight to fend off more business tax hikes and other cost increases proposed by Gov. Dannel P. Malloy and Democratic legislative leaders.

First came Malloy's February budget proposal, which contained a net tax increase of more than $800 million, including an extension of a corporation tax surcharge and lower limits on the use of tax credits and loss carryforwards that businesses use to reduce their tax liabilities.

Things got even worse when a number of other provisions made it into the two-year budget approved by the legislature in early June, including a unitary tax reporting system aimed at companies that have operations in multiple states. The total cost impact to businesses and hospitals in the approved budget was about $1 billion.

Leading the Charge

Leading up to the vote, and in the weeks that followed, the CBIA, alongside several of Connecticut's largest companies — Aetna, Travelers, and especially, General Electric — pressed their case, urging lawmakers to reconsider the tax hikes and policy changes. Brennan helped lead that charge and the pressure appeared to work: In late June, the legislature revised the budget it had passed, canceling a data-processing tax and delaying the new unitary reporting requirement for one year.

CT Inc. kept the pressure on and in November Malloy said he supported restoring the 70 percent limit on R&D tax credits and tweaking loss carryforward rules for companies that pay at least $2.5 million in state taxes.

Those proposals were approved by both legislative chambers during an emergency budget session earlier this month, during which lawmakers cut or reshuffled spending to the tune of $350 million.

Brennan called it “a small step in the right direction.”

“We do wish more was done on the structural reforms that the state really needs so we can deal with the budget deficits coming up next year and years after,” he said.

Cuts Amidst Worsening Finances

At the same time, Brennan acknowledged the significance of lawmakers' willingness to implement tax clawbacks amidst a worsening budget picture.

“The fact that we were even talking about improvements to tax policy at a time when we're looking at deficits [is] recognition that if we don't have economic growth we're only going to continue to have problems going forward.”

Brennan said 2015 was challenging.

“However I think it was a positive year in that we certainly raised awareness about the impact of certain policies … the impact it has on our ability to create and sustain good jobs in Connecticut,” Brennan said.

Brennan is also pleased CBIA helped bat back a $15 minimum wage bill targeted at large employers, as well as a bill that would have placed strict rules on providing employees a set work schedule well in advance.

Looking to 2016

In September, CBIA was already thinking about 2016. It began organizing discussions between chambers of commerce and trade associations to identify legislative priorities for the year ahead.

While Brennan felt pressure to ratchet up the rhetoric this year, he said he's pleased with how CBIA has expressed itself.

“We were aggressive, but doing it in a responsible way,” he said. “It didn't get partisan or personal.”

And the CT20x17 campaign to improve the state's business friendliness wasn't a wash, he said.

Though Connecticut fell from 36th to 39th in Forbes' business competitiveness ranking and from 42nd to 44th in the Tax Foundation's ranking, CNBC ranked the state 33rd out of 50 states, up 13 spots from 2014.

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