Rutigliano, Devlin & Kupchick: Op-ed- GE is Symptom to a Larger CT Problem

By State Reps. Brenda Kupchick (R-132), Laura Devlin (R-134) & David Rutigliano (R-123)

The news that General Electric (GE) has made the decision to leave Fairfield and our state is very disappointing. While it’s encouraging the Kleban family is in discussions with GE about the headquarters property, we anticipate a significant impact across our community and our state as GE and the jobs they provided, leave.

First, let’s look at what the Connecticut tax policy has been for the last decade. Respected Connecticut economists Nick Perna and Fred Carstensen have both described Connecticut as “the land of unsteady habits” because of how the budget comes together.

Companies look five to 15 years out. GE cited Connecticut’s five tax hikes since 2011 makes it hard to plan. Firms look for more solid ground.

Carstensen wrote, “Nothing is so hostile to business as uncertainty. Connecticut, it seems, has become the state of uncertainty.”

Each and every year the business community, our state’s economic engine, come to Hartford and asks for predictability and reliability when it comes to state tax policy, permitting business to make important decisions about investment or expansion and the future of their workforce. Unfortunately, their requests for a stable tax policy have been ignored and most recently has even been met with downright ridicule.

Last June on the eve of our state budget debate and vote, GE then Aetna, Travelers, and other major corporations asked the Connecticut General Assembly to NOT pass a state budget which changes the tax rules further.

At that time, GE said the proposed tax increases are “truly discouraging” and that the company would “seriously consider whether it makes any sense to continue” to remain in Connecticut. They went on to say, “It is essential that Governor Malloy and legislative leaders find a more prudent and responsible path forward for Connecticut and its residents in their current budget negotiations.”

That appeal fell on deaf ears and the budget passed, 73-70 in the House of Representatives, 19-17 in the State Senate and signed by Governor Malloy, with the House and Senate Democratic leadership saying they were calling GE’s bluff and GE and others could absorb the new tax hikes by just taking a few less trips on their yachts.

The consensus among GE officials was that neither the Democratic lawmakers nor the governor took their position seriously. As a result, the following day GE CEO Jeff Immelt sent out an email notifying employees that he had “assembled an exploratory team to look into the company’s options to relocate corporate HQ to another state with a more pro-business environment.”

Key reasons GE included were:

• Significant and retroactive tax increases
• Five tax hikes since 2011
• The 2015 budget imposed the second highest tax increase in the state’s history, behind the nearly $2 billion tax hike passed in 2011

In September, we were invited to meet with GE at their headquarters. They said Connecticut’s fiscal situation had been a concern for some time. They said they weren’t looking for a “special deal” to stay. Instead, they were looking for a predictable, sustainable business tax policy that would enable them and other businesses large and small to plan and for the legislature to address Connecticut’s underlying fiscal problems.

Companies large and small and everyone in between, including the tax paying public clearly see that Connecticut’s government is unable to manage its finances and will continue to raise taxes on everyone and everything to try and plug the holes in budgets that simply don’t work.

Now what?

With GE’s announcement there has been an abundance of rhetoric flying around. Instead of their announcement being a wake-up call for lawmakers, it’s become a political football being thrown around the state Capitol.

The budget passed last June was not supported by either of us or any Republican legislator. In fact, Republican leadership wasn’t even included in budget negotiations. Some have said the minority doesn’t offer any ideas, but that simply isn’t true. We proposed seven different amendments that would have reversed the proposed taxes and offered structural reform for the 2015 budget. The Majority voted unanimously against every one of those amendments. We also voted against the implementer bill that put the budget with its damaging tax package, into motion.

By September, the state was facing another deficit, a short three months after it was passed. During last year’s special session in December, we returned to the Capitol to “fix” the budget, we again offered and voted for proposals that would make structural changes to the way the state budgets while funding core functions of government within the confines of a real and enforceable spending cap. Each proposal we offered was voted down along party lines.

Today, the legislature’s non-partisan budget office, just informed legislators the state is in the red yet again with projected deficits of $3.6 billion over the next two years.

Connecticut is facing many challenges and we are in a serious fiscal crisis. The time for partisan politics is over. It’s time for the majority to include the minority in making decisions, on budgets, state employee contracts, benefits and everything in between.

The people of this state are looking for their elected officials to work together to fix the problems we’re facing. We’re hopeful our states leaders will see GE’s departure as a learning experience and will work with all sides to get Connecticut back on track.