Connecticut businesses held a more positive outlook this year and felt cautiously optimistic about the economy, thanks in part to state leaders’ successful efforts to limit spending, pay off long-term debt and build up the state’s rainy day fund, according to a survey of over 3,000 business executives released Thursday.
In an annual survey of its members, the Connecticut Business and Industry Association found that three-quarters of companies experienced their most profitable year in 2022, and two-thirds expect profits to grow this year. CBIA also heard optimism among its members about the fiscal direction of the state — a sharp contrast to the decade following the Great Recession, when the state’s finances were far more precarious.
“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, during a panel discussing the survey results with the association Thursday. By this coming winter, Connecticut will have paid down its long-term pension debt by $7.7 billion over the last four years. The state’s rainy day fund stands at $3.3 billion — its legal maximum.
“Just knowing that you’re not carrying that burden anymore, I think this is a real positive,” McDowell said.
Still, the glimmer of optimism in the survey results was paired with disappointment that, despite the state’s fiscal strength, lawmakers failed to significantly reduce the tax burden on businesses during this year’s legislative session.
A proposal by Gov. Ned Lamont to pare back what’s known as the “pass-through entity tax” didn’t gain approval in the legislature. That measure alone could have saved more than 120,000 small and mid-sized businesses collectively as much as $60 million a year, according to CBIA.
“We’ve got things going well here, the state’s fiscal house is in order, but we’re not seeing investments in the business community that Connecticut could be doing, and that’s starting to frustrate business owners,” said Chris DiPentima, president and chief executive of CBIA.
Christina Lampe-Onnerud, founder of energy storage startup Cadenza Innovation, said the state’s financial health is important because it instills pride in people who do business here. “Yes, we have some cleanup to do,” she said, but “I think the opportunity for us right now, because our finances are in a good state, let’s use that opportunity and invest.”
For her part, Lampe-Onnerud would like to see Connecticut support the clean energy sector, noting the state’s high energy costs make it a good place to experiment with alternatives — such as the batteries her company is developing.
Rodney Butler, chair of the Mashantucket Pequot Tribal Nation, said he’s proud of recent investments the tribe has made in adding new lines of business at Foxwoods Casino, but he was less optimistic for the months and years to come. Entertainment revenue is a “leading indicator,” he said, meaning spending in that sector can forecast broader economic health — and he said the casino’s slot revenue was down about 4% last month.
“That’s just the reality of economic cycles, and we had a nice run,” Butler said. “As the broader economy starts to cool, let’s make sure we’re not leading the pack on that. And let’s see what we can do as a state to make sure that we’re down less than everybody else and we’re continuing to support businesses.”
State Sen. Cathy Osten, who attended Thursday’s event, said the “fiscal guardrails” state leaders have been adhering to aren’t only important for stoking business sentiment.
“It’s not just a business issue. The general public likes the fact that they can count on certain things happening,” Osten said.
“I was there in the 2017 timeframe when we were scratching around the couch cushions for $100,000 here, $10,000 there to cut,” she said. “I don’t want to see that happen because it only hurts the services that people need,” such as health care, heating assistance and support for nonprofit service providers, she said. “I look at surpluses as a way to support that should we get into a downturn.”