CBIA: Negotiated budget deal will create ‘real uncertainty,’ shows lawmakers have ‘forgotten’ CT’s businesses

Hartford Business Journal – Tuesday, June 3, 2025
By David Krechevsky

Business organizations across Connecticut are raising objections to the $55.8 billion, two-year budget approved early Tuesday by the state House.

The Connecticut Business & Industry Association says the legislature has “forgotten” about the state’s businesses.

Under the biennial budget, which the Senate is expected to debate on Tuesday, corporations would pay an extra $213 million in taxes over the next two years combined due to changes in income reporting and other rules.

The budget bill also includes the extension to 2028 of a corporate tax surcharge that was set to expire; that change would raise another $128 million over the next two years.

Chris DiPentima, president and CEO of the CBIA, spent most of Monday lobbying at the Capitol and Legislative Office Building in Hartford and planned to spend another full day there Tuesday.

He said he was disappointed with what he heard from policymakers.

“There were conversations I heard in the building that there’s no tax increases in this bill,” he said. “I would challenge folks who say that to make sure they read the bill, because there are tax increases on the business community.”

DiPentima cited “significant tax increases” on businesses that are included in the budget, particularly increases on “multi-state businesses and some of our largest job creators.”

Those increases are a concern, he said, because the affected corporations “could easily just move out of Connecticut and stop doing business in Connecticut, or stop adding as many jobs as they are, because they’re some of the largest job creators in the state.”

He did cite some positives, particularly the state’s investment in child care.

The budget plan takes about $220 million from this fiscal year’s surplus to create a new fund to pay for future increases in early childhood development programs.

It also continues efforts to bolster the Education Cost Sharing (ECS) program, the grant supporting K-12 school districts’ operating costs. ECS payments would grow by $90 million in the next fiscal year.

“We’ve been advocating for expanding access to more affordable child care,” DiPentima said. “When you look at the labor participation rate for men and women, it’s pretty much the same up to age 30, and then there’s about a 20% gap after that for women versus men, about 20% lower.”

He said women often bear the brunt of child care responsibilities, keeping them from “either getting back into the workforce or entering the workforce to begin with. So, from a positive perspective, there is an investment in the Child Care Trust Fund in an effort to expand child care access and affordability.”

But even that effort was done in a less-than-ideal way, he added, because it was done outside of the traditional budget spending cap.

“We advocated several other alternatives to funding child care, including what the governor called for in his January State of the State address, which was in his words, to ‘look under the hood of the budget’ for inefficiencies, to repurpose dollars,” DiPentima said.

He said there’s also a 2021 report that made over 200 recommendations “to free up between $600 million and $900 million in spending that could have been redeployed to child care, so there’s certainly more efficient, more fiscally responsible ways to have funded the childcare investment.”

In addition to CBIA, the Connecticut River Valley Chamber of Commerce also raised objections to the budget that passed the House.

Jessica Olander, the chamber’s president, said the new tax and spending package will “adversely affect everyone from large multistate corporations to the smallest of businesses, as well as ordinary residents, taxpayers and consumers.”

“The budget negotiated between the legislature’s majority and Gov. Lamont,” Olander continued, “eliminates the state’s fiscal guardrails, destroys the volatility cap, gets around the spending cap with budget gimmicks, and devotes the surplus and revenue cap permanently to an off-budget early childhood account.”

The budget, she added, “will lead to tax increases in the future, which will be to the detriment of businesses, taxpayers and consumers.”

CBIA’s DiPentima said he doesn’t expect to be able to change much in the budget at this point, but he’s stressing to lawmakers that the damage being done is significant.

“The biggest concern that we’ve communicated to people is a real uncertainty around the future of Connecticut,” he said. “The workarounds around the spending cap are the most alarming things in the budget. We’re basically diverting about $1.2 billion that would have flowed into the (state) pensions and further paid down the pension liabilities over the next two years, and we’re one of the most indebted states in the country.”

He said the fact that the legislature “really kicked open the door and figured multiple workarounds around the spending cap” has significantly increased uncertainty over future budget cycles.

“Starting immediately next year, and then in future years after that, are we just going to pretty much ignore the spending cap moving forward when we do our budgeting,” he asked. “Are the other guardrails really going to become more of a guideline or a ‘nice to have,’ but not something we really live by like we have for the past six years, which have given us budget surpluses, allowed us to significantly pay down our pension liability with almost $10 billion invested, and at the same time making significant investments in Connecticut?”

DiPentima said businesses really enjoyed a time of predictability, stability and certainty in Connecticut over the past several years since the guardrails were put in place.

“Now these workarounds are going to cause real uncertainty, for not only the business community, but for residents,” he said. “What does this mean for future budget cycles? This is a big question for Connecticut going forward.”

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