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November 16, 2015 Other Voices

Small business to lawmakers: Let us lead the way

Andrew Markowski

In a perfect world, the most recent budget issues confronted by the Malloy administration would have already been addressed in this year's legislative session. Unfortunately, even though many in the business community were calling for deeper spending cuts and warning of a looming fiscal crisis worse than what had been projected, a majority of lawmakers chose to take the easy way out and ignore the overall spending and structural problems facing Connecticut.

Just a few months into this fiscal year's contemptuous budget it was announced that thanks to an outlandish spending problem and unrealistic revenue assumptions, over $100 million in services to the state's most vulnerable were slashed. Medicaid payments to hospitals failed to be made and municipal aid grants “lapsed” so checks were never sent. Now we are faced with a deficit so complex and destructive, the key players tasked with solving the riddle of our fiscal problems cannot even agree on how large the problem is before trying to determine how much spending needs to be cut to produce a positive economic result.

Apparently it took a recent announcement from Malloy's budget chief to wake everyone up from the misguided notion that we were on the right track to economic growth and job creation. Stock market volatility was cited as the single most contributory factor in deciding to make the cuts, but the question must be asked: Why is Connecticut in such a precarious and delicate position that stock market uncertainty leads to reducing services to those who need it most? There was clearly a complete lack of prudent long-term financial planning that never would have existed if the state were held as accountable as small businesses are when it comes to balancing the books. Unfortunately, the families of the tens of thousands of people across Connecticut employed by small businesses now have the potential to be collateral damage if significant changes are not made.

Small business owners throughout the state are required to balance their budgets, appropriately project deficits and account for both short- and long-term financial hardships. The fact that there are currently three wildly different deficit projections being bantered about is only the most recent sign that there is a fundamental problem with how state government operates. Small businesses across the state have been making tough decisions for years because of diminished economic growth. It is long past due that we hold our elected officials and state government to the same standard.

While the small business community appropriately applauds the Governor for his recent acknowledgement that new or higher taxes should not be part of the solution to an ongoing budget crisis, the long-term stabilization of our economy is paramount and it begins with addressing the size and scope of Connecticut's bureaucracy, implementing sound fiscal practices, and reducing the tax burden for all.

The Governor's recent call to reduce the size of the state workforce and restructure retiree benefits is a welcomed step in the right direction, but most small business owners would like to see additional proposals discussed. This should include implementing a defined-contribution (401k type) plan for all newly hired state employees, just like most small businesses and their employees have, in order to lessen the burden on the state pension system.

Next, we should all agree that a leaner, more efficient state government that provides essential services for our residents without bogging down taxpayers with unsustainable tax rates and overwhelming cost demands is vital. With an ever-shrinking “pie” to work with, lawmakers can emulate what small business owners do best, make tough decisions and work smarter with reduced resources.

Finally, lawmakers must focus on a stable, coherent tax policy that truly provides economic growth for all sectors, allowing everyone to benefit. That means going further than the Governor's recently proposed corporate tax reforms. While Connecticut's reputation among businesses certainly needs a boost after this year's budget negotiations, small business is the true engine of economic growth for our state and the proposed tax reforms, while positive, will have little, if any, direct impact on them.

The Governor and legislators can begin to compliment the proposed and necessary corporate tax reforms by completely eliminating the business-entity tax once and for all. This biennial burden penalizes small businesses purely for existing and is an administrative nuisance at the very least. And since an overwhelming majority of small business owners pay their business taxes through the personal income tax, as pass through entities, income tax reductions must be included in the discussions in order to empower small businesses to thrive in what is currently a stagnant-growth environment.

Andrew Markowski  is the National Federation of Independent Business (NFIB) state director in Connecticut

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