In Boston Business Address, Healey Touts Investment, Spending Restraint

By Sam Drysdale
State House News Service

Months after a coalition of regional business chambers warned Beacon Hill politicians to rein in spending, Gov. Maura Healey pitched her new state budget recommendation to members of the state’s business community on Thursday as “balanced” and “responsible.”

The governor’s budget, unveiled on Wednesday, relies on a number of new recurring, multi-year or one-time revenues to finance new spending initiatives, since tax collections have slowed and come in below projections so far in fiscal 2024.

Despite slower revenue growth on the horizon, Healey made a point to note that she does not plan to raise taxes.

“After working hard to make our state more competitive, we will not be introducing new taxes or tax increases,” she said, to applause from those in attendance at the Associated Industries of Massachusetts (AIM) event in Newton.

She and legislative leaders have said they have no appetite to raise state taxes to cover spending priorities, though Healey did introduce a bill last week that would allow municipalities to increase certain hospitality taxes and establish a 5 percent local surcharge on vehicle owners, who already pay a local vehicle excise tax.

AIM President and CEO Brooke Thompson celebrated the tax cuts that Healey signed into law last year, but the business group also wants to see more done in the way of tax reform.

AIM, the largest business group in the state, supports reducing the short-term capital gains tax to 5 percent (last year’s tax package cut it from 12 percent to 8.5 percent), joining every other New England state in exempting rolling stock tractors, trailers and rail cars from the sales tax, and allowing deductions for business interests, Thompson said in her State of Massachusetts Business speech this month.

Healey didn’t touch on any of these tax policy priorities during her speech on Thursday, but pitched her housing bond bill and new child care plan as business-friendly initiatives.

The governor also did not touch on a question mark hovering around the heads of the state and businesses — an unresolved error that may mean Massachusetts owes $2.5 billion back to the federal government, which was misused during the COVID-19 pandemic.

Thompson brought up the topic in her business address as one of AIM’s main priorities this year.

“AIM strongly supports a swift resolution to the $2.5 billion deficit hanging over the state’s unemployment system,” she said. “Business should not be saddled with additional taxes because Massachusetts incorrectly utilized federal relief funds to pay for jobless claims during the pandemic.”

As for her housing bill, the governor promoted a new University of Massachusetts Donahue Institute report on the potential impact of her $4.1 billion bill, which is meant to make housing more affordable and accessible as a lack of options pushes people out of the state.

The report said the housing bill would produce tens of thousands of new homes across the state and stimulate nearly $25 billion in economic activity, create 30,000 jobs and generate roughly $1 billion in combined state and local tax revenue.

“The analysis — and again this isn’t me speaking, this is the Donahue Institute speaking — it highlights an opportunity, they say, to create upward mobility for more residents. Ramping up housing production will require growing the construction industry with more firms and more workers,” Healey said.

The Executive Office of Housing and Livable Communities, which Healey oversees, commissioned the study to estimate the impact of the housing bond bill on the state’s economy. It estimates the total public and private spending associated with the full implementation of the bill to be $15.1 billion over five years, and that it would create a $24.8 billion total economic impact in the same time span.

Thompson said the business group supports the “overarching objectives” of the governor’s housing bill, and particularly supports the acceleration of development near public transit.

In addition to injecting billions of dollars into housing production, the bill also includes policy changes such as enabling communities to enact local option transfer fees to pay for affordable housing and lowering the threshold for zoning reform.

A spokesperson for AIM said their “broad” support for the bill does not mean their members necessarily endorse every aspect of it.

“Almost every Massachusetts employer has heard from an employee at one time or another saying, ‘I’d love to come to work here, or I’d love to stay here, but I can’t afford to raise my family here,” Thompson said in her State of Massachusetts Business address.

The Greater Boston Business Chamber and the Massachusetts Business Roundtable have also supported the so-called Affordable Homes Act.

Healey also pitched her administration’s new early childhood education and care proposals, saying that the state’s high cost of living hit workers with children particularly hard.

The governor’s plan includes an expansion to the universal preschool program into all 26 “gateway cities” by 2026, making more low- and moderate-income families eligible for child care assistance, funding another year of the Commonwealth Cares for Children (C3) grants, and filing an executive order calling for a “whole-of-government” approach to boosting access to child care.

“We know we can reduce the costs for thousands of families. We can help women — thank you for the pink slip initiative — we can help women return and stay in the workforce, and we can importantly achieve the kind of high-quality education and care for our kids that they so deserve,” Healey said Thursday.

The governor also announced a new executive order she signed on Thursday, under which state agencies will no longer specify a minimum level of education when they look to hire new employees.

“Massachusetts is in the midst of a transition to a skills-based economy, in which demand for skilled employee talent is at an all-time high, and employers are seeking to broaden and strengthen their talent pipelines by prioritizing individual skills over traditional credentials like degrees,” the order says.

Her announcement was met with applause on Thursday, and she encouraged business leaders to adopt similar practices.

Healey said the state needs to shift to a “skills-based economy,” and that hiring practices just based on a degree “reduces people to a line on a resume.”

“We know how difficult it remains to fill open positions – and frankly, as the state’s largest employer, we face this challenge as well,” Healey said. “Massachusetts has the highest percentage of working-age adults with a four-year degree, at around 50 percent. We can be proud of that. But the other half of our workforce also makes immense contributions to our economy. Yet too often, job postings – both in the public and private sectors – call for a degree as a minimum requirement, even when that degree is not necessary to perform well in the role. That creates a barrier for both employers and workers alike.”

Tonja Mettlach, executive vice president of the Mass Business Roundtable, sent out a statement commending the move to “[rethink] hiring practices and [be] creative about how we recruit, retain, and invest in talent.”