Mass. economic groups press state Legislature to prioritize affordability, competitiveness

Boston Globe

14-02-2025

The state budget
Keeping the state's spending increase at a sustainable level — ideally 3 to 4 percent — should be a priority for legislators, said Doug Howgate, president of the Massachusetts Taxpayers Foundation,
a business-backed watchdog group.
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Governor Maura Healey's $62 billion budget plan, released last month, includes a spending increase of 7.4 percent from the budget she signed for fiscal 2025. Her administration has sought to frame the increase as smaller, saying it would hike spending by 2.6 percent, but that doesn't include nearly $2 billion in so-called millionaires tax revenue she is proposing the state spend.
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'Last year, I think one of the real strengths of the budget was that it did endeavor to keep those costs at sustainable levels,' Howgate said. 'I think we see how challenging that is this year, but I think that that remains really important for long-term fiscal health.'
Healey's budget proposal includes funding for transportation, housing, education, and child care. Howgate said that between the main budget proposal and supplemental budget, the hundreds of millions promised to the MBTA could eliminate 90 percent of its operating deficit in the next three years.
This structure provides some stability in the transportation system's funding for the next few years, and Howgate said he hopes it won't change with the budget now in the legislature's hands.
Taxes
Brooke Thomson, president and CEO of Associated Industries of Massachusetts, said that although
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'We certainly don't think there's any need for new tax increases, and we want to utilize the revenue that's out there in a responsible manner,' Thomson said.
Healey's proposals divvy up surplus funds from the Fair Share Amendment, often referred to as the millionaires tax, which raises state income tax on income above $1 million. The proposals split the funds evenly between transportation and education, which Howgate said the Massachusetts Taxpayers Foundation supports.
On the education side, Howgate said legislators should ensure surplus millionaire's tax revenue is used to cover one-time costs, not operating expenses, as the revenue is volatile year-to-year.
Jon Hurst, president of the Retailers Association of Massachusetts, said he hopes the state will cut property and payroll taxes, which are also costly for small businesses.
Some expressed concern about how the state will navigate uncertainty, hoping the state Legislature is prepared in case federal funding dwindles under President Trump.
'Uncertainty is always something that creates a lot of concern in the business community,' Thomson said.
If federal funding shrinks, the state may need to find additional revenue sources. Phineas Baxandall, MassBudget policy director, said this could include implementing measures to prevent multibillion dollar corporations from using offshore tax havens to avoid paying taxes in Massachusetts, which he said could add 'hundreds of millions' to the state budget, or drawing from the state's rainy day fund.
'If we do have a federally brought out rainy day,' he said, 'then we think it's appropriate to tap the rainy day fund towards addressing some of those shortcomings.'
Regulations
Hurst said one of his top policy priorities is tackling state mandates that make health insurance disproportionately pricey for small businesses. Large employers operating under federal law can offer employees lower-cost health insurance in accordance with the Affordable Care Act, he said. Meanwhile, small businesses are largely beholden to state mandates requiring health plans that are more all encompassing and therefore more expensive.
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Hurst said some providers have pushed legislators to make state programs like Medicaid cover specialty treatments and new high-cost drugs, which leads to more people using them. Providers can then demand higher reimbursements, he said, leading insurers to raise premiums.
'Beacon Hill has listened to the specialty doctors, specialty providers, and big pharma far more than they have [listened to] small businesses, and it's created unaffordable medical inflation with no choices,' he said. 'The employee of the small businesses are locked in. They're mandated. They don't have the choice that a large employer does to buy down and follow the ACA as opposed to state mandates.'
Policy priorities
Paul Craney, spokesperson and board member at Massachusetts Fiscal Alliance, worries high costs cause residents and business to leave Massachusetts. Craney said he expects MassFiscal, a conservative nonprofit, to be 'playing defense' on multiple fronts this legislative session. He said the group will oppose any exorbitant spending to cover the state's right to shelter law or support the offshore wind industry, for instance.
'There's nothing that's getting proposed that's going to make our state much better than what has been the last two years,' he said. 'So we're just trying to stop bad policies from getting passed into law, because they continue to just look at the bad policies and want to double down on them.'
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Associated Industries of Massachusetts is pushing for alternative standards to replace the MCAS, the exams Massachusetts voters removed as a graduation requirement via ballot measure in November that many
Healey's proposed budget, supported by revenue from the Fair Share Amendment, would continue funding the Commonwealth Cares for Children program, which transitioned from pandemic relief money to state support last year, along with free community college and free school meals.
Massachusetts Budget and Policy Advocacy Director Chelsea Sedani said she hopes the Legislature builds upon victories like free community college with more support for community colleges and state universities to help them accommodate the additional students enrolling since its implementation.
She also has her eye on progress toward one of her organization's 'long game' goals: baby bonds for children in the state's welfare and foster care systems — essentially, a savings-bond-like investment opened at birth that accumulates value over time for the child to access when they turn 18. Legislators
'We really see baby bonds as a way to address the racial wealth gap, to provide subsidized savings for children who wouldn't otherwise have the ability to accumulate wealth,' Sedani said.
Stella Tannenbaum can be reached at