State's taxes, health-care costs weigh on entrepreneurs

In a new survey of the nation's most entrepre neurally friendly states, Connecticut ranked 36th in large part due to the Nutmeg State's onerous tax policies and health-care mandates.

Released last week by the Small Business & Entrepreneurship Council, the 2005 Small Business Survival Index

Out of a possible 100 health-care mandates that could be instituted, Connecticut requires employers to meet 50 of them, according to the report. It might make for a safer work environment and potentially healthier workers, but these mandates take a toll on all companies, especially those with fewer than 20 employees.

As a percentage of personal income, Connecticut's property taxes represent 4.08 percent, the report says, and only six states had higher percentages Maine, New Hampshire, New Jersey, Vermont, Wyoming and Rhode Island.

Raymond J. Keating, chief economist for the council and the report's author, said that besides tax climate, Connecticut's reputation might also suffer in eyes of some potential entrepreneurs as it relates to political corruption Former Gov John Rowland and former Bridgeport Mayor Joseph Ganim are currently languishing in prison for convictions in separate bribery scandals. Bridgeport, which has seen a mini-renaissance with it Harbor Yard and sports arena complex, is Connecticut's third-largest city.

"We hear a lot of a lot of studies that don't rank Connecticut particularly high as it relates to small businesses, but we are working on improving certain areas," says Brian Griffin, vice president of the Greater Norwalk Chamber of Commerce. He singled out, tax burdens, health costs and transportation issues as three priorities his group is addressing with state and local legislators.

Griffin says that despite the state's ranking, Connecticut is still a vibrant place for entrepreneurs to come because the business market remains healthy.

Real comparisons of Connecticut's ranking from 2004, where it was 34th, arid 2005 are invalid because the author reviewed similar data from year to year but in slightly different ways. But in any event, the state's position did not change significantly. Both New York and New Jersey were ranked lower than Connecticut in 2005, 44th and 45th respectively.

Ralph Pagano, whose family owns the commercial seafood company Pagano's in Norwalk, says that while he is generally happy doing business in Connecticut, there is a disconnect between small-business owners and state gov ernment officials. "There's a lack of communication between business owners and politicians. They don't reach out to us to tell us what programs are available or to ask us what our needs are. Also, unless you're a Sikorsky or other big employer, it doesn't seem like the state promotes its industries. For example, this state supplies some of the best shellfish and seafood in the country but that fact is not promoted."

Pagano said it took lawyers within his family to find out that the business qualified for tax abatements because it is located in an economic development zone. "Trying to get information is not easy."

But he is quick to add that because of the skilled labor force, the strong economic base and the quality of life, he is pleased overall to do business in the state. Even the tax issue is not a huge impediment. "For a Northeastern state, with the services it provides, the taxes are not a huge issue. They are what they are."