Massachusetts Housing Secretary Ash pitches tax credits for 'extraordinary' opportunities
BOSTON >> After scoring the relocation to Boston of General Electric's headquarters, the Baker administration wants new abilities to lure companies to Massachusetts.
The "extraordinary economic development opportunities" program included in Gov. Charlie Baker's $918 million jobs bill was retained in the $594 million version (H 4413) that cleared the Economic Development and Emerging Technologies Committee this week.
Speaking Tuesday before a House panel reviewing the bill, Housing and Economic Development Secretary Jay Ash said a freer hand to offer companies incentives could net more businesses choosing the Bay State.
Ash told the House Committee on Bonding, Capital Expenditures and State Assets his ability to offer incentives to companies is now "almost non-existent."
"It's really crazy," Ash told the News Service. "If you're not a manufacturer in a Gateway City — which would be worth $5,000 a job — you would be eligible for maybe as little as $1,000 a job. So to say to a company that is going to make a quarter of a billion dollar investment in your Commonwealth that you're going to give them $1 million worth of tax credits, it's not even worth them pulling the trigger."
The legislation would enable Ash and Administration and Finance Secretary Kristen Lepore to designate companies as eligible for the tax credits, and charge the Economic Assistance Coordinating Council with awarding up to $50 million, in aggregate, in annual tax incentives.
There is currently a more regimented tax incentive program, with various parameters, and an overall cap of $30 million, according to Paul McMorrow, Ash's director of policy and communications.
Massachusetts offered GE $120 million in funding, including for the purchase of its new headquarters, and Boston gave the company $25 million in tax relief over two decades.
While the state offered the company infrastructure improvements to move from Connecticut, McMorrow said tax credits are a more common incentive and tax credits provide a "direct cash benefit to companies' bottom lines."
"There's always a concern that somebody is just looking to reach into your pocket," Ash told the News Service, when asked about companies that might bounce from state to state in search of incentives. He said, "We make sure there's an economic benefit to the state that would parallel the incentive we're giving away."
Ash said the "sweet spot" is for the state to recover its investment through payroll taxes in three to five years while the timeframe could run 10 years or in some cases even longer.
"The new classification of projects would simplify the categories and expands the types of businesses allowed to qualify for the credit," the Associated Industries of Massachusetts said approvingly in written testimony.
On the same day Ash testified, Veolia North America announced it would move the headquarters for the power and water giant from Chicago to Boston. Keolis North America made a similar move earlier this year.
Meanwhile state tax revenues have come up shorter than projected and the administration said it expects $450 million to $750 million less in the fiscal year that starts a week from Friday.
Ash said economic development programs, which generally borrow money to leverage job growth, provide more benefit than cost.
The largest piece of the bill would reauthorize the MassWorks infrastructure grant program with $300 million. Ash highlighted MassWorks projects that he said are laying an "infrastructure backbone" to support housing in Chicopee, supplying sewer service to support small manufacturers in Lancaster, and clearing the way in Burlington for EMD Millipore to relocate in-state, retaining 400 jobs.
"I think generally speaking the committee did a pretty good job of incorporating most of the key elements that we were interested in in that bill," Baker told reporters on Tuesday. He said, "Their bill is a three-year bill; ours is a five-year bill so all the dollar totals are lower. But I get that. The idea of coming back and revisiting some of this stuff in a couple of years is a pretty good idea and I'm perfectly fine with that."
Another piece of the bill would rework state funding for site cleanup. Ash told the committee the brownfields program is funded "sporadically," and by borrowing money for cleanup the program could be more dependable. The bill would allow for $15 million in brownfields funding for three years.
"It also puts a chill on the development environment when the money isn't available," Ash told the News Service.
The legislation that cleared the Economic Development Committee did not include a reworking of corporate tax liability that Baker included in his jobs bill.
Some existing state programs are geared specifically for Gateway Cities — a group of 26 municipalities.
Rep. Paul Heroux, an Attleboro Democrat, asked officials for metrics on the success of job training programs and said the goal of Gateway Cities — medium-sized cities with a median income below average and less educational attainment than the state average — should be to lose that designation.
"The idea is to no longer be a Gateway City," said Heroux, whose home city of Attleboro is classified as a Gateway City.
The group Transportation for Massachusetts urged the committee to include language in the governor's bill that explicitly allows municipalities to use demand-based pricing for parking.
The group also asked lawmakers to increase its commuter transit benefits to the federal benefit level — similar to a bill (S 2217) it said had cleared the Revenue Committee.
Colin A. Young contributed reporting.
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