Murray Announces Agreement on Economic Development Bill

(BOSTON, MA) – Senate President Therese Murray (D-Plymouth) announced that the Senate and House have reached a final agreement on economic development legislation, which includes a sales tax holiday and promotes a business-friendly environment that will help small businesses stay open, expand and create jobs. The Senate-led initiative introduced by Murray in April will overhaul the state’s network of business development agencies, establishing a streamlined, cohesive model with built-in oversight and transparency to reduce redundancy and waste.

The final, compromise bill also includes a sales tax holiday for August 14 and 15 to help accelerate consumer demand and continue the state’s economic recovery.

“This bill is about re-organizing, re-focusing and re-committing ourselves to creating jobs and sharpening our competitive edge,” Murray said. “It sends all the right signals to businesses that we’re serious about investment and growth here in the Commonwealth.”

The legislation sets the sales tax holiday for Massachusetts retailers this year for August 14 and 15 to help accelerate consumer demand and continue the state’s economic recovery.

The bill includes numerous provisions to promote economic development in the state’s “Gateway Cities,” the group of larger municipalities spread throughout the Commonwealth that offer rich opportunities for economic expansion within existing infrastructure. The bill includes new expedited state permitting rules for projects in such cities, approves a $50-million bond authorization to support the “Growth Districts” initiative, and approves a new housing development incentive program for developments in “Gateway Cities.” 

The legislation uses the Senate’s plan to create a ‘one-stop shop’ for businesses seeking to expand or locate in Massachusetts by requiring the existing Massachusetts Office of Business Development (MOBD) to contract with regionally-based economic development organizations.

These private organizations would act as the primary contact for businesses seeking assistance from the state and perform business prospect management services on behalf of the Commonwealth. MOBD would oversee the efforts of these organizations, provide leads, and share information about state programs and services.

The goal is to increase competition among regions for new business to ensure businesses find the best fit in Massachusetts. With MOBD and the regional organizations providing clear direction for accessing economic development services, there will be less confusion about how to access technical assistance, grant and loan programs, and expansion support.

The legislation also increases accountability, communication and oversight of state agencies, quasi-publics and state contracts with private organizations engaged in economic development activities. It requires every governor to publish a written economic development policy by December 31 of the year he or she is elected to help the Commonwealth strategically assess economic development goals over the long-term.

The bill further requires the Secretary of Housing and Economic Development to act as chair of the boards of most state authorities engaged in economic development and business assistance activities and institutes performance management reviews. 

All organizations involved in economic development activities, including quasi-public authorities, will be required to submit annual reports to the Secretary of Housing and Economic Development and publish audited financial statements.

The legislation also takes the Senate plan to merge organizations tasked with marketing the state nationally and internationally, including the Massachusetts Office of Travel & Tourism, into the newly-created Massachusetts Marketing Partnership.

The Partnership will serve as a central marketing organization for the entire state and will be charged with increasing the Commonwealth’s efforts in the areas of tourism and international trade. The Massachusetts Film Office and the Massachusetts Sports Partnership will also be included in the Partnership.

Through the creation of the Massachusetts Growth Capital Corporation, a larger number of small businesses will gain access to working capital so that they can continue to grow even in times of tight credit. For those small companies that receive financial assistance from the state, finance and management consulting will be mandatory to help keep companies afloat and prevent job losses.

The legislation also consolidates the Economic Stabilization Trust, which provides financial assistance and consulting to struggling businesses, with the existing Community Development Finance Corporation, further streamlining state assistance to small businesses.

The legislation also requires an economic impact statement to be filed by administrative agencies planning to adopt new regulations that details the cost of the proposed regulations to small businesses before public hearings on those regulations. Additionally, it requires a rolling review of regulations to identify and modify those which prove too costly. 

The bill also expands the state pension fund’s investment authority by creating a $25-50 million credit program to support lending to fast-growing small businesses in Massachusetts.

Further streamlining the state’s approach to economic development, the Department of Business Development is eliminated within the Executive Office of Housing and Economic Development, allowing MOBD a direct reporting line to the Secretary, and the Massachusetts Health Educational Facilities Authority (HEFA) is merged with MassDevelopment.

Several other agencies, including the independent Massachusetts Sports and Entertainment Commission and the Massachusetts Industrial Development Authority, are eliminated, with an estimated savings to taxpayers of $1 million a year.

Other provisions of the bill:

• Improves low-cost access to small claims courts by raising the limit on filings from $2,000, where it has been for many years, to $7,000;
• Provides a two-year permit extension for development projects struggling with tight credit conditions;

• Calls for a study of business energy costs, and a study to determine the feasibility of a state-owned bank.
• Approves new rules clarifying the application of the state’s new combined reporting rules, enacted in 2008, to foreign-owned companies doing business in Massachusetts;
• Extends the period in which a corporation can carry forward its losses, from the current five-year period to 20 years;
• Encourages investment in Massachusetts-based start-ups by creating a 3 percent tax rate on capital gains earned on investments in those companies; and
• Approves new borrowings by the state to capitalize the new Massachusetts Growth Capital Corporation and re-capitalize the Massachusetts Technology Development Corporation.

The bill was signed into law on August 5.