Lawmakers scale back Baker’s small biz plans

Boston Statehouse

Gov. Charlie Baker. (Chris Van Buskirk/SHNS/File 2020)

BOSTON (SHNS) – When Gov. Charlie Baker offered a revised budget plan in mid-October, one of the highlights flagged by the administration was a $100.7 million recovery plan that would invest in small businesses and community lenders that had not been helped during the pandemic by federal aid.

Baker and his top budget chief said $35 million would be set aside for grants targeting businesses with 50 or fewer employees in underserved markets or owned by women, veterans and minorities. Another $35 million would go to community development financial institutions.

But as the budget process has moved along, Baker’s recovery plan has been chipped away by legislative Democrats who are electing to use the state’s available resources in different ways. And several business group leaders say they’re more concerned now with the way Baker proposed to pay for his recovery plan than the fact that lawmakers have reduced the size of the effort.

The $46 billion budget passed by the House and the one currently being debated in the Senate this week would reduce the size of Baker’s small business relief effort by close to half, with the House approving almost $54 million in comparable programs and the Senate Ways and Means Committee proposing about $56 million.

“We put some of the governor’s small business recovery plan in it, but it was not as much as the governor had,” House Ways and Means Chairman Aaron Michlewitz said early this month when he presented his plan.

Both the House and Senate leaders want to trim the $35 million small business grant program and community development lending support by half to $17.5 million. Baker’s capital investment matching grant program for businesses with fewer than 20 workers was cut by $5 million to $10 million in the House budget, and the branches proposed to cut back on Baker’s plan to turn vocational high schools into career technical institute’s to train people for new types of jobs. That career training initiative was slashed from $8.4 million in Baker’s budget to $1.5 million in the House and $5.5 million in the Senate Ways and Means budget.

The House did boost adult education funding by $5 million.

“It’s disappointing and shortsighted that the House and Senate would look to reducing funds to help our mom and pop business owners get back on their feet. We all know how challenging these times have been and it’s going to get much worse before it gets better. We need every resource we can muster to help get these folks through the next several months,” said Greg Reibman, president of the Newton-Needham Chamber of Commerce.

Some senators, including Sen. Eric Lesser, want to put some of the governor’s funding back into the budget. He and nine of his colleagues filed an amendment to increase the small business grant funding to $35 million.

But not all business groups are putting their energy into getting that funding restored to the budget.

Jon Hurst, the president of the Retailers Association of Massachusetts, said small business grants are more effective when they come from the federal government in larger dollar figures.

“We are far more concerned on preventing MANDATED COSTS and red tape at the state level,” Hurst emailed, listing the elements of a “perfect storm” next year for small businesses that includes a minimum wage increase, the implementation of paid family and medical leave and increases in unemployment insurance taxes and health insurance premiums.

Hurst said he’s worried that Baker’s plan to pay for his small business recovery program, which has been largely adopted by the Legislature, would add to that growing financial burden on small employers.

Baker put forward an accelerated sales tax plan that would net the state $267 million in one-time revenue by requiring businesses that have at least $2.4 million in annual sales to speed up the timeline on which they remit sales taxes to the state.

House and Senate leaders rejected Baker’s proposal to move to real-time sales tax remittance by 2024, but embraced the more immediate shift to having business transfer sales taxes before the end of the month in which they were collected.

Christopher Carlozzi, state director of the National Federation of Independent Business, said his lobbying efforts have been focused on communicating to legislators the NFIB’s concerns with the accelerated sales tax plan and “most notably the fairly low threshold that will impact some smaller businesses.”

While officials say the threshold will hit only the largest 6 percent of businesses in Massachusetts, the Massachusetts Taxpayers Foundation said the change will be “costly for them at a time many are reeling from the loss of business resulting from the pandemic.”

The business-backed foundation is supporting a Sen. Joan Lovely amendment that would allow businesses to make an estimated prepayment by the 25th of each month rather than an actual payment before the books are closed for the month.

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