Governor Patrick Announces Plan to Support Small Businesses and Create Jobs
Bill includes tax credits for job creation, unemployment insurance freeze, tools to reduce health care costs
Read the Governor's remarks from the Chamber Event
Photos from event (also available on our Flickr account):
BOSTON - Wednesday, February 10, 2010 - Building on his continued efforts to foster job creation and economic growth in the Commonwealth, Governor Deval Patrick today filed legislation to help small businesses hire new workers and reduce the cost of doing business.
The Governor's legislation provides tax credits for businesses that create new jobs, eases healthcare and unemployment insurance costs for employers and creates a new organization dedicated to providing businesses with the financial capital and resources they need to grow.
"Small businesses account for 85 percent of Massachusetts businesses, and for them this is an economic emergency," said Governor Patrick at an address this morning to the Greater Boston Chamber of Commerce. "If we want new jobs, we need to focus special attention to meeting the needs of small businesses. That means addressing their need for access to working capital and credit, helping deal with escalating health care costs in the short term, simplifying necessary and eliminating unnecessary regulation, fixing the unemployment insurance system and helping to train ready workers."
The Governor's plan builds on the job creation efforts undertaken over the last three years, and delivers on many of the initiatives outlined at the Patrick-Murray Administration's Economic Summit held last October. Since the beginning of the Administration the Governor has prioritized significant investments in infrastructure, tax incentives for businesses, innovative financing for development, streamlined permitting and other initiatives. The Governor has also instituted policies to create jobs in emerging industries such as Life Sciences and Clean Energy, positioning Massachusetts as a global leader in these fields.
"Small businesses are the anchor for many of our regional economies," said Lieutenant Governor Timothy Murray. "This proposed legislation will not only provide support for their business needs, but also incentives to foster job creation and economic stability across all regions of the Commonwealth."
The plan includes the following elements:
Small Business Job Creation Tax Credit
A central piece of the Governor's proposal is a tax credit for small businesses that will help create thousands of new jobs this year. Small businesses that create and retain new full-time equivalent (FTE) jobs this year will be awarded a $2,500 tax credit for each net new job they create.
The credit, capped at $50 million, will be awarded on a first-come, first-served basis to small businesses defined as those with 50 or fewer employees. To qualify, companies must create a new FTE position and retain that position for at least one year.
Lowering Health Care Costs for Small Businesses
The Governor's initiative also includes tools for easing the burden of health care costs on small businesses. Under existing authority, the Governor is directing the Commissioner of Insurance to immediately file an emergency regulation requiring health insurance companies to file proposed changes in small business premiums with the Division of Insurance in advance of their taking effect so the Commissioner can review and disapprove rates that are excessive or unreasonable in relation to the benefit provided. His plan also includes legislation that would trigger a presumptive disapproval of health insurer rates that are significantly above the Consumer Price Index for Medical Services. The bill also provides for similar oversight of provider rates to ensure shared responsibility for controlling costs.
Additionally, the bill gives smaller companies the choice of more affordable plans beginning this July. It requires health insurance carriers in the small group market to offer at least one selective network plan with premiums that are at least 10 percent lower than the premiums for the full network product. It also allows insurers to set up bi-annual open enrollment periods to encourage people to get and keep health insurance.
The Governor's proposal also gives the Commissioner of Insurance authority to examine small business health insurance premiums and prevent any duplicative or unjustified administrative charges that drive up costs for small businesses. It empowers the Commissioner to protect small businesses from drastic increases in their premiums driven by changes in the composition of their workforces (particularly the age of their workforces).
Unemployment Insurance Reform and Rate Freeze
The Governor's proposal provides relief to employers by freezing the unemployment insurance (UI) rate increase schedule for 2010, minimizing cost increases on businesses. The rate freeze at Schedule E would save employers on average $158 per employee, or $391 million in total.
Additionally, the Governor's bill makes the Workforce Training Fund a Trust Fund in order to protect employer contributions and ensure that the money in the fund is used to fulfill its intended purpose. The Governor's bill also strengthens the Division of Unemployment Assistance's anti-fraud measures and includes protections for workers, reducing unfair barriers to eligibility.
Massachusetts Growth Capital Corporation
The Governor's bill consolidates the three agencies responsible for small business finance into the Massachusetts Growth Capital Corporation (MGCC), an umbrella organization that would function as a one-stop source for debt-equity and financing for small and mid-sized businesses. The MGCC would be funded by a $25 million capital bond authorization and by a $15 million transfer from the Emerging Technology Fund.
The Governor's bill also includes:
- $50 million bond authorization to fund the Growth Districts Initiative, allowing for infrastructure improvements in specific areas identified as being promising locations for significant new commercial, residential or mixed-use growth;
- Extended permitting to encourage development; and
- Improvements to the District Improvement Financing Program.
Learn more about the Governor's small business plan and other job creation initiatives at mass.gov/governor/jobs