Connecticut can no longer afford to be the "best-looking horse in the glue factory" and must ramp up its efforts to attract and expand employers, the state's largest business group argued at an event in Hartford on Wednesday.

CBIA's annual Connecticut Economy Summit highlighted the group's annual survey of executives, which reported growing pessimism that the state's companies can compete on cost and ease of doing business as the national economy cools.

In a survey of about 400 business leaders, mostly in manufacturing, CBIA found that 39 percent thought the state's business climate was declining, up 6 percentage points from 2023.

Inflation was a challenge for 80 percent of the surveyed executives, with nearly 90 percent reporting higher costs, especially for labor. Worker-related expenses, supplies and state and local taxes were singled out as rising costs specific to Connecticut businesses.

"The cost of doing business has become a critical concern," CBIA's report states.

The surge in costs around recruiting and retaining workers was singled out at Wednesday's event, with 46 percent of survey respondents saying their largest expenses in 2024 were related to their workforce.

Health care costs alone are rising 10 to 20 percent year-over-year for his company, said Ed Rodriguez, president and CEO of Penmar Industries, a manufacturer of tapes and labels in Stratford.

"Help me stay here," Rodriguez said, appealing to lawmakers and state agencies to help Connecticut businesses control costs by cutting back on regulations.

CBIA CEO Chris DiPentima cited workforce needs as a growing concern in the state, with 93,000 current job openings, up 33 percent compared to pre-pandemic levels, even as the labor force has declined by 23,300 people — down 1.2 percent — since February 2020.

The only outburst of applause at the event came when a panelist questioned why Connecticut was touting its business climate compared to neighboring states, such as New York and Massachusetts.

"For you as a state, to limit yourself to being the best option of those three isn't quite visionary," said Katherine Saunders, a national consultant on economic leadership.

"Sometimes you want to be the best looking horse in the glue factory, but that's not a preferred position," said Doug Loon, CEO of the Minnesota Chamber of Commerce, who spoke of his own state's effort to compete against lower-cost regions.

Connecticut companies need to take a more active role in charting the state's economic future, DiPentima said. The group compiled a plan for the state's economy entitled "Opportunity Connecticut" and presented it at the Wednesday event.

Key to improving the business climate is holding back new regulations, such as a bill last year that would have created a state fund to pay some striking workers, panelists said. Gov. Ned Lamont vetoed the bill one month after it was approved in the final hours of the legislative session.

"I just don't know in which world that even makes sense," Rodriguez said of the legislation. "It is that kind of legislation that takes confidence away from business owners."

Another proposed new regulation that was spotlighted for criticism was a bill earlier this year that would have put curbs on use of artificial intelligence. That bill died in the legislature in May after Lamont threatened a veto.

"Yoking entrepreneurs in this fast-evolving industry with this very heavy set of regulatory requirements that no other state is imposing on them at that point in time ... (it) was not the right time for that," said Josh Geballe, Yale University's senior associate provost for entrepreneurship and innovation.

The state needs to encourage growing industries like quantum computing, climate tech and advanced manufacturing, Geballe said. Lawmakers need to keep funding programs that are working and steer away from excessive regulation.

"First do no harm," Geballe said. "If we have things that are policies that are working from a fiscal perspective, let's not muck those up."