What should we make of a Republican governor from a large state with a relatively strong economy who comes to embattled Connecticut to steal some jobs from us? For starters, we should pay attention and not dismiss him as a publicity seeker. We should not shoot the messenger, who in this case has a rather questionable business career of his own, but rather assess his message.
As Florida Gov. Rick Scott likes to remind us, he and Gov. Dan Malloy, a Democrat, have something in common. Both were elected in 2010 and re-elected four years later — both times by the narrowest of margins. But the similarities pretty much end right there. Scott spent his entire career in the private sector before entering politics, whereas Malloy has spent the bulk of his career in government service.
Be that as it may, Scott thought he would join the likes of other governors, such as New Jersey’s Chris Christie and Indiana’s Mike Pence, by sticking a finger in Malloy’s eye as he grappled with how to roll back a $1.8 billion tax increase that hit businesses hard.
“I’m here simply to get all the jobs to Florida,” Scott told business owners last week at the Norwalk Inn and Conference Center.
Several prominent state Republicans attended Scott’s talk, so there were partisan overtones to the event. I share the concern of Democrats who noted the irony of our elected officials attending a speech given by a governor whose goal it is to increase the jobless rate in Connecticut. But I accept the Republicans’ explanation that they were just trying to learn a thing or two from a governor whose state has performed better than ours economically. Of course, for the Republicans the event also had the side benefit of pushing Malloy’s buttons.
To his credit, Scott did not limit his critique of Connecticut’s business climate to the state’s tax policy. Truth be told, notwithstanding the protestations of GE, Aetna, and Travelers, the state’s taxes aren’t as high as the business community would have us believe. Most surveys place Connecticut in the bottom half of the 50 states in the area of business climate.
But Connecticut is tied with business-friendly North Carolina for second-lowest business tax burden relative to productivity, according to the Council on State Taxation. The council’s report, prepared by Ernst & Young, takes state and local tax burdens and measures them against gross state product. Put simply, Connecticut’s taxes are higher than in many states, but businesses here also produce much more than they do in a lot of those low-tax states Republicans like to crow about.
No, I’m convinced that taxes aren’t as big a problem in Connecticut’s business climate as we’re led to believe. And this is also borne out anecdotally by my own conversations with business owners in my part of the state. They’re less likely to complain about high taxes than burdensome regulations and the cost of living.
UConn economist Fred Carstensen has illustrated this problem better than anyone. He has branded Connecticut as having “the worst permitting regime in the country.” Companies avoid Connecticut because they have no idea how long it will take them to get permits. Instead, they move to states more responsive to their needs, he said.
“It’s not the state of steady habits. It’s the state of uncertainty,” Carstensen opined. And as we all know, uncertainty is the enemy of the successful business model.
In addition, Connecticut has the highest electricity rates in New England and the fourth highest in the nation. These exorbitant prices come courtesy of a boneheaded deregulation plan approved by the General Assembly in 1998. That scheme, the always fair-minded former Republican state Sen. Andrew Roraback told me in 2007, was a “bill of goods” that “has proven to be an unmitigated disaster.” Oh, and we have the second highest gasoline taxes — higher even than California.
Finally, from labor to housing, there is no getting around the fact that Connecticut is simply a high-cost state. We’ll never be able to compete with Alabama or Texas for cheap housing and low wages — or warm weather, for that matter.
But we could remove some of the barriers to enterprise that frustrate and discourage business owners. Obviously, we don’t want to unleash the forces of unfettered markets and destroy our environment or cause even more sprawl. It shouldn’t be an all-or-nothing proposition.
And there is something Scott didn’t say but should have: those who value an expansive government that helps the less fortunate and protects the environment should remember one important thing — the private sector foots the bills and the only way you can maintain a large and inclusive public sector is with a dynamic and thriving private sector employing lots of people and generating lots of revenue. Otherwise, you’re in the unsustainable position of maintaining a big government on small government revenues.
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