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June 27, 2016 Editorial

Small-biz regulation analysis smart move by lawmakers

The state legislature took a small but important step last week that could potentially improve Connecticut's business climate in the years ahead.

The House and Senate voted to overturn Gov. Dannel P. Malloy's veto of a bill that seeks to analyze the fiscal impact of new regulations on small business.

Specifically, the measure requires the legislature's Office of Fiscal Analysis to include an estimate of the number of businesses that would be affected by proposed legislation and an estimated fiscal impact on those companies. The legislation also redefines small business to include firms with 250 or fewer employees.

Overriding Malloy's veto and adopting the bill into law is a smart move by legislators, especially if they are going to make good on their promise to improve the state's business climate.

Small businesses are the lifeblood of Connecticut's economy, yet the state legislature each year passes new workplace mandates — without taking into account the cost-burden on employers — that make it harder to conduct commerce in the state.

Connecticut's regulatory environment is often one of the main contributing factors for the state's dismal rankings in national business-climate surveys.

For example, in Forbes' 2015 Best States for Business ranking, Connecticut's regulatory environment was ranked No. 41 in the nation. Meanwhile, according to a 2015 Connecticut Business & Industry Association Public Policy Survey, regulations and mandates ranked No. 3 on employers' list of what drives their investment decisions in the state.

A key criticism of state government is that it often lacks critical data in making policy decisions. We hope this new law gives lawmakers the necessary information to better weigh the cost-benefit analyses of employer mandates.

Of course, actions will ultimately speaker louder than words. If lawmakers continue to pass new regulations even in the face of data indicating they will be harmful to small businesses, then the new law will be rendered feckless.

Meantime, we also understand the tough position Gov. Malloy was put in when considering the legislation. While Malloy said he supported the intent of the bill, he vetoed it because the measure's language was overly broad and the bill itself would place an undue burden on state agencies.

No doubt, the extra analyses mandated under the law will require additional staff time and resources in various state agencies. At a time of severe budget cuts in state government, it may seem counterintuitive to pass new laws that widen state agencies' workloads.

However, the state's budget crisis is being fueled by Connecticut's anemic economic growth, and the only way to reverse course is by fostering a better business climate that promotes small business investment and expansion. Improving the state's regulatory environment must be a key component of that strategy and we hope that's exactly what this new law encourages.

A budget crisis is not an excuse for the state to continue to bury its head in the sand when it comes to weighing the financial impact of new regulations on the business community. Instead, it's a time for the state to reprioritize its resources.

And the priority these days should always be promoting policies that foster economic growth.

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