BOSTON, Mass. (SHNS)–The Healey administration is working on an economic development bill to file in the new year and “hit the ground running in 2024,” Economic Development Secretary Yvonne Hao said Wednesday, forecasting a focus in the legislation on technology related to climate change.
An omnibus bond bill from the governor focused on economic growth would loom as a likely major priority for House and Senate Democrats over the first seven months of 2024 leading up to the end of formal sessions on July 31.
The last economic development package signed into law in 2022 injected $3.7 billion into Massachusetts’ economy — though it took nearly 100 days longer than anticipated to come together and abandoned tax cuts and reforms that legislators touted and which they still have yet to deliver on.
“We’re already starting to work with legislators and with A&F, Administration and Finance, to draft out the bill,” Hao said during an appearance at the Boston Globe’s Globe Summit 2023 with reporter Jon Chesto. “We want to hit the ground running in 2024 and come back in the new year and file that bill, and hope we get it passed before the end of the legislative cycle in July.”
Hao said the bond bill goes hand-in-hand with the administration’s economic development plan, which the state is required to develop every four years. The council developing the plan has had regional meetings across the state with about 1,300 members of the public, the secretary said, and has to submit its plan to the Legislature and the governor by the end of the calendar year. “This is our chance to really come up with a strategy for our state, and so we are deep and working on that now,” Hao said.
She announced that developing the climate technology industry will be an important part of both the plan and the administration’s bond bill. “We want to lead on fighting climate change, and at the same time, we want to become the leader in economic growth around climate tech,” Hao said. “I think a lot about what happened in life sciences. These two industries are similar in a lot of ways. They leverage our ecosystem and we have all the ingredients here across all of our labs and all of our different talents that we have.”
The secretary continued, “In life sciences, we had all the ingredients and then the state government under former Gov. Patrick said, ‘Let’s accelerate that. Let us convene and let us apply resources. We committed a billion dollars over 10 years, and let us message and let us adapt regulations and let us make sure that we are helping to accelerate the formation of this cluster here.'”
In June, Gov. Maura Healey committed to continuing the high-dollar investment into the life sciences sector that started under Patrick, vowing that Massachusetts will remain a national and global leader in the biomanufacturing and medtech manufacturing spaces.
Hao said the administration can “use some of those same levers” through investing resources and changing regulations to allow the climate technology industry to grow in the state, and create a “cluster of climate tech.”
“I think we have a template already,” she said.
But as the administration looks to future economic development strategies, the Legislature is still in the midst of negotiating unfinished business from the last economic growth package.
Tax cuts that were originally proposed under former Gov. Charlie Baker were swept up into an omnibus economic development bill last summer, meant to help residents struggling with the rising cost of living.
The final version of the bill signed by Baker last fall abandoned the targeted tax reform measures in light of unexpected mandatory rebates the state owed to taxpayers. The House and Senate this year again approved tax cut packages, but differences among Democrats have left the plans hung up since June.
Hao said Wednesday that those tax cuts — specifically, the business-friendly cuts that Healey proposed and appear to be at the center of negotiators’ disagreements — are important to keep the state competitive and its economy growing.
The secretary said the state has fallen in competitiveness since the implementation of a new surtax on the state’s highest earners. Voters last November agreed to the “fair share” constitutional amendment adding a 4 percent surtax on annual income over a million dollars, an initiative that Healey supported.
“The problem with Fair Share is that from a kind of optics and perceptions side, we do have some challenges,” Hao said. “There are some folks out there, I don’t love them, but they’re out there saying, ‘Oh, Massachusetts is going back to Taxachusetts.’ And if you look at the rankings of our state, we used to be ranked 34th in state competitiveness … What’s hard is with Fair Share passing, we’re now I think moving to 47th.”
She added that a recent CNBC poll ranking states in terms of the cost of doing business put Massachusetts at 49th.
With the state’s competitive and affordability ranking dropping, Hao said it is important to implement tax cuts that encourage businesses to both move to the state and to stay here.
This includes Healey’s proposal to reduce the short-term capital gains tax rate from 12 percent to 5 percent — which the House backs but the Senate doesn’t — and raising the threshold at which the estate tax kicks in.
Hao referenced a statistic that estimated that an average 1,100 residents left Massachusetts per week in 2022, and added that “I worry those numbers are the same or worse” in 2023.
“We’re just trying to be competitive, and to prove to founders and to all kinds of families too that this is a state that is really trying to do the right things,” she said. “We are going to invest Fair Share in all kinds of things that help families and businesses, and by the way, we’re going to make some adjustments to make sure that we stay competitive and we are a great place to start a family and start a business. So that’s really the reason why we want to get something passed this fall.”