As Legislature Debates Governor’s Budget Proposal, State’s Businesses Must Be Kept In MindApril 28, 2015
Joseph A. Kask, CPA
Governor Malloy’s recent $40 billion biennial budget proposal for the State of Connecticut contained some reasons for optimism for many in Connecticut. Cities and towns saw a small but unexpected increase in vital state aid, a proposed reduction in the state sales tax could bring some relief to every Connecticut resident and the unveiling of a detailed long-term vision for much-needed improvements to Connecticut’s transportation infrastructure.
The budget proposal also features some notable cuts, which most agree were expected in a year in which Connecticut still faces a budget deficit: local education, higher education and hospitals all face some reductions this year. Now and for the next few months until June, the state legislature is in session and deciding what to officially pass into law.
Included among these cuts and increases are proposals that could impact Connecticut businesses. According to published reports, businesses stand to lose exemptions and tax credits worth more than $230 billion if this proposal is adopted. Additionally, the extension of the corporate profits tax through 2017, which is part of the governor’s proposal, would mean an additional $75 million paid out by the state’s businesses.
As someone who has the opportunity to interact with business leaders throughout the state every day, it is understandable that businesses of all sizes—from larger corporations to small businesses—have concerns about these proposed cuts. While it is clear to everyone involved that sacrifices may have to be made in order to balance the budget, the hope in the business community is that the burden placed upon Connecticut’s revenue-generating entities isn’t too severe for the next two years. The business community hopes that these concerns are addressed.
Connecticut has many assets which allow businesses to grow and thrive here. The quality of life is as good as any in the country—we have excellent schools, beautiful places to live and raise our families, a highly educated workforce and close proximity to major cities like Boston and New York.
There are challenges that Connecticut faces in 2015 and beyond from a business standpoint, particularly when it comes to creating new jobs and retaining existing ones. Connecticut has one of the best workforces in the country, but it is aging, which presents another concern. A large segment of Connecticut’s workforce is approaching retirement age, and a recent survey showed that at least 25% of Connecticut’s businesses face substantial workforce retirements in the next five to ten years. While businesses need to plan now for these impending changes, the state needs to have a plan to attract new employees to replace those who will be retiring. This will take investments in training, educational and development programs, as well as an environment that provides incentives to those businesses trying to grow.
Connecticut has always been a state that meets challenges such as these head on, and working together we can do so again this year.
Joseph A. Kask is the Office Managing Partner of Blum Shapiro’s West Hartford office. BlumShapiro is the largest regional accounting, tax and business consulting firm based in New England, with offices in Connecticut, Massachusetts and Rhode Island. The firm, with over 400 professionals and staff, offers a diversity of services that includes auditing, accounting, tax and business advisory services. In addition, BlumShapiro provides a variety of specialized consulting services such as succession and estate planning, business technology services, employee benefit plan audits, litigation support and valuation. The firm serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies.