The following is Housing & Economic Development Secretary Greg Bialecki’s response to Sen. Eldridge’s 3/22 post:
Governor Patrick and I agree with Senator Eldridge on all the important elements of an effective tax or other business incentive program: we ought to be transparent and consistent about how any incentives are being awarded; we ought to make awards that are reasonable in relation to the jobs created; we ought to monitor the companies’ actual performance and we ought to have remedies when the company has not performed as it committed.
A great example of how those principles are already at work is the tax incentive program of the Massachusetts Life Sciences Center, created by Governor Patrick and the Legislature in 2008. Here’s how it works: to ensure transparency, the Massachusetts Life Sciences Center publicly announces life sciences companies that are receiving tax incentives, including the amount received and the number of jobs that the company has committed to creating. To ensure accountability, companies are required to apply annually for continued incentives and are eligible to do so only if they have met their job creation obligations from prior years. The program is competitive, enabling the Commonwealth to make the best investments available, and there are strong clawback provisions in place for companies that fail to live up to their end of the bargain. This program alone created more than 600 jobs last year, and is projected to create more than an additional 900 this year. The amount of the tax incentive awards under this thoughtful program is well below the $35,000 per job figure quoted by Senator Eldridge.
The Governor and I also worked with the Legislature in 2009 to make very similar improvements to the Commonwealth’s investment tax credit awards program for general businesses (called the “EDIP” program”). Thanks to the 2009 reforms, the amount of the tax incentive awards under this program is now well below the $35,000 per job figure here as well. And we have moved very aggressively over the past four years to monitor companies’ actual performance disqualify companies who do not meet the program standard.
We look forward to working with the Legislature to make sure that all of these important elements are in place with respect to the other tax and business incentive programs available in the state. When done well, incentive programs like these do support the creation of hundreds of construction and permanent jobs all around the Commonwealth. Along with significant investments in education, workforce training, infrastructure and small business financing, they are an important tool in putting people back to work in Massachusetts.
-Sec. Bialecki
Secretary – thanks, as always, for your response. I know we’ve spoken about this subject several times — both online and off! — and your attention to this issue is always appreciated.
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p>Many of the programs and tax deals (such as the Fidelity tax break) were inherited, not created, by this administration. As I said, there’s little we can do to change deals made over a decade ago – but we can make changes going forward.
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p>I have great respect for the way the Life Sciences Center (LSC) program has been run. As you point out, the process has been transparent, monitoring seems to be done effectively, and strong clawback provisions have been included – and enforced. If every other economic development and tax incentive program could be so transparent and accountable, it would be a huge step forward for the Commonwealth.
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p>That’s precisely why I would like to see all our tax and business incentive programs held to the same standard. Your support of this effort is appreciated, and I look forward to working with you and Governor Patrick on making these changes this session.
Can we create an environment were all businesses have an equal chance at success? And stop corporate welfare?
Massachusetts ranks in the lower 5% of State in the Union for a positive business climate. Quit picking winner or losers and help everyone.
We are doing lots of things to improve the overall business climate, such as lowering the corporate tax rate, reducing permitting times, lowering the capital gains tax rate for investors in Massachusetts start-up companies, improving access to working capital loans for small businesses, rejecting excessive health care premium increases for small businesses and increasing access to workforce training grants.
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p>And it seems to be working. CNBC recently ranked us as the 5th best state to do business. More importantly, we have been outperforming the nation on jobs for the last four years. (We were 44th in the nation on job growth for 2000-2006.)
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p>But we believe in continuous improvement. What else should we be doing?
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p>We also believe that targeted tax incentives are an important tool to encourage the growth of key industry clusters. But we certainly have not been pursuing them at the expense of our overall business climate.