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Summer,
2003 Newsletter
A
Business-Friendly Economic Environment?
Despite signs of improvement in a few
industries, Massachusetts continues to trail many other states in
economic recovery. Few
would argue that the policies of state government can have a
significant impact on the pace of economic recovery and job growth
in the private sector.
Many state programs and legislative acts
directly affect the ability of Massachusetts businesses to
successfully compete with companies from other states.
In some areas, tremendous strides have been made over the
past decade to reduce the cost of doing business and to make
Massachusetts more business-friendly.
The following is an update on some of the most important
areas of concern for Massachusetts businesses:
§
Workers’ Compensation:
The extensive reforms made to the workers’ compensation
program in 1991 have been a remarkable success and shining example
of what can be done to reduce business costs.
In 2002, the cost per $100 of payroll in Massachusetts was
20% below the national average.
§
Unemployment Insurance:
Even with a significant reduction in UI costs over the past
decade, UI rates in Massachusetts are still among the nation’s
highest. In 2002, the
average UI cost per employee was 70% above the national average.
Legislation passed at the end of 2002 prevented an 80%
increase in 2003 UI rates, an increase which would have happened
automatically absent legislative action. The issues of replenishing the UI trust fund and UI reform in
general remain critical.
§
Health Care: As are companies in many states, Massachusetts companies are
faced with double-digit annual increases in health care premiums.
Family premiums in Massachusetts were the 3rd
highest in the nation in 2000, higher than any other high tech
state. Rapidly rising
health care costs are a major problem for many Massachusetts
businesses.
§
FY 2004 State Budget:
The differences between the House and Senate versions of the
state budget for the fiscal year beginning July 1, 2003 have been
worked out in Conference Committee.
There are several pieces of the House and Senate budget that
are encouraging for businesses in Massachusetts.
o
Investment Tax Credit (ITC).
The House and Senate budget extends the ITC for five more
years at the rate of 3% (before reverting to the 1% rate).
The ITC benefits manufacturers and R&D corporations by
helping to offset the cost of plants and equipment.
o
Tax Disclosure.
The Senate version of the budget contained a requirement for
insurance companies, financial institutions and publicly traded
corporations to disclose sensitive tax information.
If this measure had been approved in the final budget, this
would have made Massachusetts the only state in the nation with such
a widespread and difficult reporting requirement.
The Conference Committee did not include this measure in its
budget.
o
Economic Affairs. There seems to be solid support for the economic affairs
responsibilities of state government being elevated to a
secretariat. Responsibilities
of this office would include promoting business development in
Massachusetts.
o
Massachusetts Manufacturing Extension Partnership (MassMEP).
The Committee ensured federal matching funds will be
available to MassMEP to help small and medium-size manufacturers
improve productivity.
In some areas,
Massachusetts has made tremendous progress in making the state more
attractive to businesses: The
nickname “Taxachusetts” is not used as frequently these days as
in years past! However,
there is still much to be done to reduce business costs and prevent
Massachusetts companies from operating at a competitive disadvantage
as compared with other high tech states.
Employers are encouraged to contact their state legislators
to make their voice heard on issues that directly affect the
business environment and prospects for prosperity in Massachusetts.
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