State Puts Businesses On Firmer Ground

Gilmore

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By Brian R. Gilmore Special To The Worcester Business Journal

When the state Legislature concluded its formal session July 31, the results were mainly favorable for the Massachusetts business climate.

On the plus side, the Legislature and the governor approved important measures to address the high costs of health care and electricity, boost economic development, and improve education and workforce development. They balanced the fiscal year 2013 budget without new taxes while keeping the pledge to lower the corporate excise tax to 8 percent and freezing unemployment insurance (UI) taxes this year and last. The UI rate freeze alone saved employers almost $900 million over the two years.

While there were some steps backward — ranging from moving private sector childcare providers into a collective bargaining unit to the adoption of more health insurance mandates — the Legislature chose not to act on several anti-growth proposals, including paid family leave.

Positive measures approved during the session include:

• The health care containment law. This is a measured first step toward slowing the runaway health insurance premiums that have impeded job creation and economic growth by tying future cost increases to the growth of the state's economy. The law, built around innovative reform of the health care payment system, initiates the long-awaited second phase of reform that was launched in 2006.

• Energy legislation that resolves inequalities under which commercial and industrial ratepayers have paid a higher percentage of electricity costs despite using less power. The measure requires utilities to obtain 7 percent of their peak-load power needs from renewable sources by 2016, but also mandates competitive procurement through long-term contracts of 10 to 20 years, while reducing the guaranteed return to utilities under those contracts by almost one third.

• An economic development bill that creates a $50-million fund to help local universities and non-profit institutions compete for federal research and development money, along with other provisions such as the recent sales tax holiday. Lawmakers removed an expansion of the bottle bill to non-carbonated beverage containers.

Several policy issues important to employers were not approved by the Legislature. These include long-term reforms to the state's unemployment system, repeal of the restrictive definition of an independent contractor and amendments to make the mandatory treble damages law apply only to willful violation of the state's wage and hour law. Associated Industries of Massachusetts (AIM) intends to pursue these reforms in the next session.

AIM commends the Legislature and the Patrick administration for responding positively to the state's economic challenges. Beacon Hill understands that Massachusetts must continue to work to maintain its employers' competitiveness in the global marketplace. This requires sustained attention and action.

Brian R. Gilmore is executive vice president-public affairs at Associated Industries of Massachusetts, a nonprofit, nonpartisan association of Bay State employers.

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