When the legislative session began earlier this year, Connecticut lawmakers pledged to focus on affordability and cost, seeking to keep the state on track as national economic uncertainty persists — and as a number of consumer costs, ranging from healthcare to energy, were on the rise. For mem bers of the state’s business community, that was a promising focus, one that closely aligned with their own goals.  But as the session continued, and legislation began to emerge out of committees, the alignment business leaders had felt with legislators began to shift. Now, in the session’s aftermath, businesses in the state say the session ultimately produced mixed results. There was some progress on issues like tax credits, while other measures, like AI regulations and new labor requirements, could introduce new burdens on a range of industries, groups argue. As the state’s largest trade group, the Connecticut Business and Industry Association, sees it, the session was story of “one step forward, three steps back.” Leaders of the organization say that in an election year, some lawmakers appeared to have prioritized appearances over the state’s long-term economic growth. “When those November elections are over and we come back in the session next January, Connecticut is not going to be any more affordable than it was going into this session,” CBIA president and CEO Chris DiPentima said. “In fact, it may be more unaffordable because of energy costs going up, because healthcare costs will most likely go up.” As business groups continue to digest and reflect on the session, they say it’s hard to give the session a firm thumbs up or thumbs down. But ultimately, they argue that lawmakers missed some key opportunities, particularly to help small businesses. Business groups made their priorities known early The Connecticut Business and Industry Association made its focus on small business needs known earlier in the year, releasing its policy agenda in the days before the start of the legislative session. It called for regulatory relief for the state’s small businesses, which account for more than 90% of businesses in the state and employ nearly half of Connecticut’s workforce. The association also called for policies that would reduce business expenses, including eliminating the sales tax on energy and gas bills, creating association health plans that include fewer mandated insurance requirements, and capping license costs to make it easier for people to obtain occupational licenses. “We wanted to focus on the small businesses because we felt that the environment was starting to shift with some of some of the federal headwinds around tariffs and tax policies, program cuts at the federal level, and also … at the state level, because small businesses are such a critical piece of our economy,” DiPentima said.  That focus was echoed by other organizations. “Small business owners are resilient, and at the same time, uncertainty is what keeps them up at night,” said Andy Markowski, the Connecticut director of the National Federation of Independent Business, who also noted that his organization’s members wanted lawmakers to focus on affordability this year. “So anything that the legislature can do to help reduce that uncertainty is certainly welcome.”  Some policies were met with praise In some areas, business priorities did manage to win passage in the legislature this year. For one, the state expanded its research and development tax credit for small businesses, a move that will allow them to dedicate more money to innovation, research and hiring. The proposal was highlighted in the governor’s budget, and it was also introduced in standalone legislation, House Bill 5319 in the Commerce Committee this year. Business groups also praised the state’s creation of a small business “concierge” at the Department of Economic and Community Development. The position is modeled after a similar concierge role in the Department of Energy and Environmental Protection. The office will help businesses navigate state programs and make it easier to get quick answers from DECD. Other bills could lead to new relief for small businesses in the future, with lawmakers endorsing the creation of studies and working groups that will look at things like supporting artificial intelligence use by small businesses and tourism. But business groups said that while the governor and lawmakers kicked off the session with several common goals, cracks began to emerge early. The first major split occurred when lawmakers passed an emergency bill, Senate Bill 298, on a largely party line vote in late February. The bill contained several proposals lawmakers weren’t able to get over the finish line in previous years — including a section addressing the warehouse workforce. That particular section, which sets new standards around warehouse operations and gives employees more information about company quotas and biometric surveillance, has drawn pushback from CBIA. Leaders say the worker-friendly adjustments could hurt companies in the state’s growing logistics sector. The U.S. Chamber of Commerce, the largest lobbying group in the country, argues that Connecticut now has the “worst” warehouse policy in the nation. For DiPentima, the bill’s swift progress though the legislature was concerning. “That was an early signal that things were starting to go sideways,” he said of S.B. 298’s passage.  Some bills, advocacy groups warn, could be bad for business Other bills also drew concerns. H.B. 5003, an omnibus labor bill, outlines a number of new worker protections and touches on a wide range of industries in Connecticut. Passed in the final days of session and signed into law by Lamont earlier this week, the bill was praised as a massive victory for the state’s labor community and has been strongly embraced by unions and workers advocacy groups.  Business groups, however, said it would increase compliance costs and penalties for companies in the state. “When you have a wide ranging bill like that that imposes new reporting requirements or any sort of changes on private sector businesses, small business owners have to be attuned to what happened and figure out what they can do to comply,” Markowski said. The CBIA was sharper in its criticism. “There’s just a ton of labor mandates in there that are going to make it not only harder for the construction industry to grow, but are also going to be more expensive,” DiPentima said, arguing that the state’s Labor and Public Employees Committee, which advanced H.B. 5003, has taken an “anti-business” stance in recent years. Asked about some of those criticisms, Sen. Julie Kushner, co-chair of the committee, said the legislation is needed and provides valuable support to workers.  “The CBIA’s criticism of this bill is misplaced, and in time the advantages of it will be recognized by all concerned,” she said in an emailed statement. Other bills that drew concern from business groups included Senate Bill 4 and Senate Bill 5, which dealt with consumer data privacy and artificial intelligence regulation. Similar artificial intelligence legislation had failed in previous years due to concerns from the governor’s office that regulations would hinder innovation in the state. This year, lawmakers ultimately decided that new amendments to the bills reduced these concerns, and Lamont also indicated he would sign the updated and reworked legislation. The legislature’s AI Caucus ultimately prevailed: the legislation passed with bipartisan support in the final days of the session. But despite assurances that the impact on businesses has been minimized, some groups still worried that the AI bill — despite its sections on workforce development and increasing AI knowledge — will ultimately create new burdens for businesses that could hamper innovation efforts. “It sends a warning signal to the rest of the country that Connecticut is now starting to regulate artificial intelligence usage,” DiPentima said. “That sends a signal not only to those businesses in the state, but also to businesses looking to come to Connecticut — and those in that growing sector of innovation and technology — that we’re going down the wrong road here.” Asked about those concerns, Senate Majority Leader Bob Duff, D-Norwalk, said the legislation is needed, adding the bill outlines helpful and harmful AI applications simultaneously. “You get one bite at the apple on this and not multiple bites at the apple,” he said, adding that he believes the legislation will be a model for the rest of the country.  Some industry-supported bills didn’t pass Industry groups also highlighted concerns around bills that did not pass, despite being beneficial to businesses in the state.  One bill that repeatedly came up in conversation was Senate Bill 2, a priority bill for Senate Democrats that would have changed the state’s sales-and-use tax, allowing some energy use by businesses to be exempt from the tax.  The Connecticut Restaurant and Hospitality Association, the trade association representing the state’s restaurants and hotels, was especially supportive of another provision in the bill that would have allowed a portion of the sales-and-use tax to be dedicated to tourism funding. Connecticut’s financial investment in tourism lags considerably behind neighboring states, a fact that has frustrated the state’s hospitality sector for years.  When it comes to the state’s restaurant and hotel industries, there is a “secondary benefit,” from increased tourism, CRHA executive director Scott Dolch said this week.   “I think S.B. 2 was our biggest priority this year,” he said.  The legislation, one of the priority bills Democrats introduced with hopes to potentially fold into the budget, ultimately did not advance. While some of the sales tax changes were added to the budget, the section that reallocated some of the tax to tourism was not. Duff said that while lawmakers largely supported the provision and wanted to see state tourism dollars increase, it was left out due to funding concerns and needing to keep the state’s budget balanced. “Diverting part of that money to tourism, as good as an idea that was, it was not something that we’re able to get across the finish line, because I think there was concern about softness of revenue,” he said. And while this year ultimately produced notable wins for healthcare policy, business organizations were also frustrated by legislators on that front as well, pointing to a bill that would have allowed for association health plans that died in the Appropriations Committee.  Deeper economic concerns remain Connecticut continues to navigate a mixed economic picture. The state currently has more than 70,000 job openings and has seen thousands of workers leave the workforce over the past year. And while the state has seen strong GDP growth in recent months, business groups still worry that this economic success could be stifled by limited job growth and economic uncertainty in the wake of federal policy changes.  “It was so important that policymakers meet this moment to address growing the workforce, to address making the state more affordable so we can keep more people in Connecticut,” DiPentima said. “To attract more people to Connecticut, to grow that workforce, and make it stimulate economic growth that maybe is otherwise starting to slow down.” But state leaders say that even as some headwinds persist, Connecticut is on a good economic trajectory — one that was boosted by the legislation they passed this year.  “Gov. Lamont has done more to strengthen Connecticut’s business climate than any other governor in recent state history,” spokesperson Cathryn Vaulman said in an emailed statement. “Under his administration, we have delivered the largest personal income tax cut in state history while making significant investments in education, housing, workforce development, and social services. At the same time, the Governor has stabilized the state’s fiscal future and paid down nearly $10 billion in pension debt, contributing to eight credit rating upgrades for the state.”  “The administration continues to work closely with business leaders, municipal officials, legislative partners, and others to reduce costs and create opportunities for residents and businesses across Connecticut,” she added.  For now, with the session over, the state’s business groups say they are continuing their work and listening to the needs of their members. And while they may not have gotten everything they wanted this session, the organizations say they do see lawmakers working to engage.  And in a state where policy can take years to finally get over the finish line, groups say those relationships are the ultimate sign of progress.  “We didn’t get a healthcare package. We didn’t get dollars for tourism. We didn’t get, you know, other things like that, sure,” Dolch said. “But I think a successful session is when you sit back and you say, hey, you know what? You didn’t get everything you wanted to get, but the conversations are moving forward.” ...read more read less