The good news is that 66% of all Connecticut businesses surveyed believe they will turn a profit. The bad news from the latest Connecticut Business & Industry Association survey is that about a third believe the business climate in Connecticut is declining, and a whopping 81% are struggling to find experienced workers.
The survey released Thursday at the Connecticut Economy event Thursday morning found one-quarter of respondents believe Connecticut’s economy will expand over the next 12 months with 29% forecasting national growth.
Inflation, which is at 3.7%, remains a challenge for 83% of the businesses and only 10% of executives believe the state’s business climate is improving while 41% says it’s static and 33% believe it’s declining.
Connecticut has 91,000 job openings which is about 30% above pre-pandemic levels. Over that same period the labor force, those working and those looking for work, declined about 41,000 people.
While attendees of the event held at the Hartford Marriott praised the state for getting its fiscal house in order they agreed there’s still plenty of work to be done.
“We’ve had a few years of budget surpluses, and I think you can’t underestimate what a boost that is to morale,” said Duby McDowell, founder of McDowell Public Relations.
But she admitted there’s still more to do.
For instance, the pass-through entity tax. Gov. Ned Lamont planned to increase the credit for the pass-through entity tax to lower the cost to about 123,000 small and medium-sized businesses in the state. The proposal was eliminated from the state budget before it was passed.
The tax, passed in 2018, was designed as a benefit for the business owners it impacts, allowing them to claim state and local tax deductions which they became ineligible for as a result of federal tax changes made in 2017. While the federal law capped the personal income tax deductions of business owners, the pass-through entity tax shifted the burden onto the business and allowed business owners to claim a deduction on their federal income tax return.
Connecticut was the first state to offer such a credit, however, soon after its passage, Lamont and the state legislature reduced the tax credit from around 93% to 87.5%, leaving businesses owners on the hook to pay more of their personal income taxes.
The survey found that only 16% of respondents approve of the state legislature’s handling of the economy and job creation, up four points from last year, with 43% neutral and 41% disapproving.
“Too many taxes and financial burdens on small businesses, too many restrictions – incredibly risky for small business owners to continue operating in this way for long,” one respondent said. “It’s unsustainable.”
Small businesses largely feel ignored by policymakers when it comes to taxes and health care costs. The state also didn’t support a measure to allow Association Health Plans to be sold, at the same time as small group insurance sold in the state is expected to increase next year on average by 7.4%.
Ninety-one percent of surveyed executives say costs are increasing, 6% said they are unchanged and 2% are unsure.
