I agree with Senator Eldridge’s statement that Evergreen Solar’s announcement is deeply disappointing. The Marlboro-based company has worked hard to compete against heavily subsidized foreign competition in China and, as the Senator points out, it has brought a lot of good jobs to Devens and they will be dearly missed.
But I strongly dispute the notions that our growth strategy for Massachusetts’ clean energy economy is bad policy and that our economic development focus is limited to tax credits. We work with innovative companies like Evergreen Solar because we are engaged in a global fight for the jobs of tomorrow. We invest in education, innovation, infrastructure, health care and regional economies because we are committed to building a better, stronger Massachusetts. Yesterday’s news from one company shouldn’t overshadow the many successes we’ve had so far. Let’s talk about what happened in this case and how it fits into the bigger picture.
First of all, Senator Eldridge’s post contains a widely-reported but factually incorrect number. The $58 million incentive package the state offered Evergreen Solar is a mix of tax credits, lease savings, and long term grants that accrue over many years. $13 million of this package went directly to the town of Devens for infrastructure improvements that will benefit any company that chooses to set up in the area.
In regards to the remaining dollars invested in the company itself, we have clawback provisions in place for these programs for a reason – to ensure we get a true return on our investment. We are thoughtfully, quickly and aggressively working to recover this funding and we are very confident that we can take a substantial portion back. We will fight to recover every cent that the taxpayer is owed.
We work to bring new businesses to communities across the Commonwealth as part of a broad strategy for economic growth and job creation. Investing in our clean energy sector is a critical part of that strategy.
And disappointments like Evergreen Solar’s decision won’t weaken our resolve to maintain our place as America’s top destination for clean energy innovation. Employment at clean energy companies in the Commonwealth has increased 60% from 2007 to 2010. Not counting Evergreen there are 145% more people employed in Massachusetts’ solar energy sector right now than there were four years ago.
Our comprehensive economic development strategy is working. Massachusetts is creating jobs faster than most other states and we are coming out of the recession stronger than the nation as a whole. And we will continue to fight for every job and company that will keep us competitive in the global economy. I can promise you that.
Secretary Greg Bialecki
the problem is the massive amounts of subsidies given out, with very little (to no) transparency.
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p>I’m much more curious to know what the administration thinks about the $2+ billion a year that goes toward subsidies to businesses of all kinds, if it thinks that’s the best way to spend that money and what it thinks should be done to ensure it’s spent wisely, efficiently and we get transparent reports periodically to know how effective it is in creating jobs and establishing industries.
Ryan
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p>Great point and two questions:
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p>1) Is there a list of the $2 billion and to whom it goes? I think not as this might be part of your transparency question but I thought I would ask rather than assume.
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p>2) Does this include local municipal subsidies rather? I would also think not, but want to be sure. I think we need to include the municipal subsidies in the discussion as they impact not only the local budgets but the state budget as well. By this I mean there might be additional funds available for local aid in some parts of the state if some municipalities did not “give away” money to developers and others, money which could be used for education, local real estate tax relief, local business incentives, etc.
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p>I don’t always agree with your positions, but they are well considered and this one strikes a chord.
particularly on #2.
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p>I would certainly welcome the administration to shine what light it can on it in this thread.
For information on the Forum From the write up, some of these issues, like “what is in the Tax Expenditure Budget” will be addressed. Also, some of this information is online, see: http://www.mass.gov/?pageID=do…
The frequently cited $2B number for so-called “tax expenditures” covers so many different kinds of tax policies that it is hard to make a statement about their effectiveness or transparency except in reference to a particular policy. Here are a few examples…
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p>The legislature has given the economic development agencies (which I oversee) the authority to make tax credit awards to particular companies based on their job creation commitments. Those programs are quite transparent and have been effective in job creation (we can and do keep track). They also have fairly effective clawback provisions. They are a very small part of the $2B number.
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p>We also have an investment tax credit (modeled on a similar federal tax credit) that is generally available to any business that meets the eligibility requirements. So we don’t know on a company by company basis who gets the credit or how many jobs they created. But there are a number of economic studies that show that this kind of program is effective in promoting private business activity, including hiring, and we support it.
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p>There are other “tax expenditures” in that $2B number that are not really direct subsidies to businesses. For example, we do not impose a sales tax on services in MA. We don’t consider that to be a business subsidy, but that one item is a very large portion of the $2B number (several hundred millions of it).
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p>So a good discussion of our tax expenditures has to consider each of these different kinds of tax policies.
how are we ever going to compete in a global economy. Giving these tax breaks is really nothing more than redistributing wealth, because then our other taxes have to go up to cover the loss. That then takes more money from everyday consumers who can’t afford to pay for anything.
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p>Don’t we all know where this is going. The tax subsidies will continue and wages will continue to stagnate and drop while inflation makes paychecks smaller and smaller. No medium to large business is satisfied with modest profits and must get multi-million dollar profits in order to get the pat on the back from Wall Street and the elite.
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p>So until the American working middle class is finally nailed down to really low wages, ridiculous cost of living expenses, and higher taxes, there will be no competition.
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p>The only solution to this is to ask large and medium sized business owners, including those like Evergreen Solar, to be satisfied with a smaller profit. They need to take on their generational responsibility to see America through this crisis and help to lift Main St up from the pit so that the entire country can rise from the pit. This is not likely to happen because greed always wins. The reason why greed always wins is because greed is applauded and supported. In the American economy, that’s what competition is all about. GREED.
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p>Come to our state. We support greed. We’ll cut your taxes so you can make more millions. Not enough millions? We’ll cut taxes and lower wages more so you can have more millions!!!
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p>I completely understand the concept. It’s just a disgusting thing to be proud of.
As far as Evergreen Solar itself, it should be pointed out that Evergreen has not yet made any profit, even with the business incentives it received from MA.
so their financial statement shows, but the executives were paid a significant salary, still. (I’m not sure why they need five Vice-Presidents.) The shareholders received nothing which is why they are jumping ship. When there is no profit, I guess it’s their generational responsibility to jump ship, thereby encouraging companies to move offshore. That stock market, what would we do without it. So now, off to China they go.
I wanted to take a moment to respond to Secretary Bielecki’s thoughtful BMG post and clarify some of the points I made yesterday.
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p>First of all – Secretary Bialecki, your response is greatly appreciated. Although we may disagree on certain parts of the Legislature and the Patrick Administration’s approach to economic growth, I believe we are focused on the same goal — and the most important thing right now is that we have begun what I hope is a comprehensive discussion on the best strategies for creating jobs in Massachusetts. Thank you for taking part in this discussion.
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p>My previous post was not a total condemnation of Governor Patrick’s economic development program — far from it. I’ve been a longtime supporter of the Governor and generally think he’s done more to grow our economy sensibly, even in these tough times, than any administration in decades.
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p>In particular, as the Secretary points out, Governor Patrick has prioritized infrastructure improvements and education – two necessary ingredients for economic growth – during his time in office. Those stances are appreciated, and ones that I have strongly supported as a legislator.
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p>Tax subsidies for corporations has been just one tool in the economic development toolkit, I agree. My point is simply this: perhaps it’s a tool we need to reconsider.
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p>As a commenter on my previous post pointed out, I originally supported the Evergreen Solar deal. I saw it as a good way to jumpstart the clean tech industry in Massachusetts, and a way to create hundreds of good jobs in my district. I admit that my support was misguided.
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p>Over time, as I’ve taken a harder look at some of these corporate subsidies – including the subsidies we gave to Evergreen Solar and the ones we’re currently giving the film industry – I’ve grown to believe that this isn’t the most effective economic development strategy for our state. I agree on the importance of promoting the clean tech industry in Massachusetts, but I’m no longer sure that major subsidies to corporations is the best way to do it.
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p>When bad things – like the loss of a company we had invested in so heavily – happen, it behooves all policymakers to take a step back and say “What happened – and how do we prevent it from happening again?” Sometimes policies and programs fail. It’s a part of governing. But the real failure comes when we don’t learn from these mistakes as we go forward.
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p>I believe this is one of those moments to learn from. That’s why I’m glad we’re having this conversation, and hope it continues productively as we move forward this year.
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