Governor Deval L. Patrick
Merrimack Valley Chamber of Commerce
Thursday, March 21, 2013
Sometime during the big blizzard last month I was out on the Pike – when you weren’t supposed to be on the Pike -- heading to or from that bunker in Framingham, I don't remember which. Except for plows and emergency vehicles, the roads were clear of other drivers. Most of the work of preparing for the storm was done. The big decisions -- like whether to declare a state of emergency or implement the travel ban -- were made. Except for the constant business of tracking the path of the storm, reading my hourly email updates on outages and shelter needs and school closings, and getting on periodic briefing calls with the Cabinet, there was little for me to do at that moment. For a minute, I let my mind wander to that nearly empty road, knowing it would be jammed again soon enough with people who depend on it.
And I thought to myself, believe it or not, "our grandparents gave us that." The generation or two before ours asked themselves what kind of Commonwealth they wanted for themselves and then for us, and then set about to shape it.
I believe that one of government’s most critical functions is to provide the platform and the tools necessary to help people help themselves. For me, that means prioritizing job growth, spreading opportunity to every corner of the Commonwealth, and positioning Massachusetts to compete for jobs and talent in the global marketplace.
In Massachusetts, our strategy has been to invest in education, innovation and infrastructure. That strategy works. Because we have invested time, ideas and money in the schools, in the innovation sectors of our economy, and in needed infrastructure projects, Massachusetts has recovered from the global economic collapse faster and stronger than most other states. Our unemployment rate is well below the national average, and last month, subject to confirmation later this morning, the federal Bureau of Labor Statistics reported that we have added back nearly all the jobs we lost during the recession. Massachusetts has emerged as the top international supercluster in the life sciences and biotech, and as a national leader in clean and alternative energy. Our digital technology industry is resurgent -- especially in the areas of robotics, game technology, cyber security, Big Data and financial services. Precision or “advanced” manufacturing is making a comeback.
Every corner of the Commonwealth has shared in these investments. Here in Merrimack Valley, we reopened the Hines Bridge in Amesbury and are rebuilding the Whittier Bridge – one of our “mega-projects” -- as well as the Bates Bridge connecting Haverhill to Groveland and the Rocks Village Bridge connecting Haverhill and West Newbury.
This past fall I cut the ribbon on the next phase in the revival of an old mill complex in Lawrence that has grown in 5 years to house 40 small, medium and large businesses and 3500 employees. And NxStage Medical, Inc., a leading manufacturer of innovative dialysis products, officially opened their new headquarters in Lawrence.
I can’t even begin to list the number of housing, educational and public infrastructure projects we have done or are doing in Lowell.
Because of all of this, because of what we in state government have done in partnership with private industry, our economy is growing faster than the Nation as a whole. Our state’s bond rating is the highest in history and we have one of the largest rainy day funds in the Nation.
But with almost 233,000 people still looking for work, we have more to do. The questions are: Are we satisfied with the pace of our recovery? And if not, are we willing to do what it takes to grow faster? Almost all of us agree that we can accelerate our growth, create many more jobs, and significantly strengthen our economic outlook by deepening our investment in transportation and education. That is what my budget proposal is all about.
By our best estimates, it will take about a billion dollars in new annual spending to continue to pay the bills we inherited, restore our roads, rails and bridges to a state of good repair, and expand the system modestly but strategically so that we stimulate economic growth in underserved parts of the Commonwealth.
$1 billion will get us a modern, equitable, properly funded transportation system, but not a luxurious one. The number is big not because it's the proverbial "wish list," but because of what this Commonwealth has failed to do for 20 years.
I have also proposed to invest an additional $900 million in new revenue in education. We have made great progress in strengthening education in Massachusetts over the past 20 years. Our students perform at the top in national and international assessments of academic achievement. But underneath our nation-leading results, many students are stuck in deep and persistent achievement gaps. And these gaps threaten our ability to remain competitive with other states and nations in the global marketplace.
There are strategies to remedy this that we know work, and some will require money. By our estimates, $900 million gets the over 30,000 kids off the waiting list for early education, extends the school day for middle schoolers in places where poverty is concentrated so they get what they need, makes college more affordable for our young people by restoring the buying power of the MassGrant program and the public’s share of support for our public colleges and universities, and enables our community colleges to serve as the platform for skills training.
Brainpower is our signature economic edge, and failing to invest in that in Massachusetts would be like Texas failing to support the oil industry or Iowa their corn farmers. Indeed, failing to invest in education would practically mean choosing which 4-year old, which high school student applying to college, and which of the almost 233,000 people looking for work should wait until the time is just right for us to act.
I have proposed to address these realities now because doing so secures our economic future, and because failing to do so puts our future at risk.
I have been all over the Commonwealth since I proposed my plan, engaging people in conversations about their wants, and the taxes required to pay for them. I have been listening hard. What they tell us is no surprise.
People want modern, convenient, safe, accessible and affordable subways, buses, commuter trains, roads, ferries, bridges and airports. Workers, mothers, students, businesses, tourists, tradesmen, elders, people with disabilities need access to work, housing, customers, recreation, the doctor, their relatives, the grocery store and the gym. And they want it equitably in all regions of the Commonwealth.
Of course, every mom and dad wants the best education for his or her child. It's true no matter what neighborhood they come from. Strivers from every neighborhood want an affordable path to college. Businesses want better-prepared workers. Kids understand that, too, even the little ones. I have countless opportunities to listen to their stories about what they want to be when they grow up. As a parent, I hear optimism and eagerness. As a governor, I hear a call to action.
What our citizens, our neighbors and colleagues want is not frivolous or unreasonable. In fact, it's precisely what this Commonwealth needs to be economically strong today and in the future. Because all the evidence points to the fact that making these investments means more jobs and opportunity. If we want growth, we need investment.
That new investment will require new revenue. And though the conversation about taxes is never easy, the time is at hand to have it if we want faster and broader growth. Nearly everyone I meet, from Legislative leadership to shop owners I meet in the many conversations I mentioned, acknowledges that fact.
To be clear, new revenue does not let any of us off the hook from the business of reforming state government. That work is and must remain perpetual. I am proud of the fact that, working with our partners in the Legislature, we have achieved a raft of reforms that have eluded us for decades: closing loopholes and extending the retirement age in the public pension system; asking public employees to shoulder a larger share of their health care costs; replacing police details with civilian flaggers; simplifying the transportation bureaucracy and shutting down the Turnpike Authority; systematically combing through and discarding or updating old regulations; reducing full time employees by 6,000 positions; and more. These reforms will save the Commonwealth billions of dollars. We have more awaiting action in the Legislature now.
But reform alone is not enough to pay for 21st century transportation and education systems. If we want more, we need to pay more.
Under my proposal, most families with an income of up to $62,000 would see their total state taxes either stay about the same or go down. Families making over $62,000 would see an increase in total state taxes, according to their ability to pay. To give you a sense of the order of magnitude, a typical individual $100,000 could see an increase in total taxes of about $400 per year.
Let’s be clear on the impact: half the wage earners in this state earn $62,000 or less. What I have proposed means that total state taxes for half the state’s wage earners either most likely stay the same or go down. Costs to small businesses also go down with the sales tax cut. Those who are best able to pay more, do so, according to their ability to do so.
Under my proposal, all families would see a benefit. There would be no increase in tuition and fees next year at UMass campuses. Three- and four-year-olds would come off the wait lists for early education and qualifying students would have access to four times the amount of grant money to pay for college. T and RTA service would improve, and fares and tolls would rise more modestly, more gradually and more predictably than the pattern of fits and starts we’ve experienced in the past. Long-delayed projects to rebuild our roads and bridges would get underway throughout the Commonwealth. And there will be jobs for Massachusetts people doing work to benefit Massachusetts communities.
My proposal also assures that Massachusetts remains competitive. Let me assure you that Massachusetts does not have, and will not have, a total tax rate out of line with the rest of the country. We are currently just below the national average today in total taxes. With my proposal we would move to just slightly above the national average. Even with the proposed changes, we would remain lower in total taxes than many of the states with which we compete today for jobs and talent, and comparable to all of them.
I think that as part of this conversation, it’s also critical to address this myth that lowering taxes automatically leads to economic growth. Let me be clear, it is spending on transportation and education that supports job growth, not lower taxes for the sake of lower taxes. Last month, the non-partisan Institute on Taxation and Economic Policy issued a report evaluating the economic growth per capita of several states. The report compared nine states with relatively high income taxes to nine states with low or no income tax. The analysis made clear that the nine states with “higher” income taxes actually saw considerably more economic growth per capita than the nine states with low or no income tax. The states with no income tax have seen a decline in median income. Economic prosperity has much more to do with education levels than with the income tax rate. In other words, invest in education to grow opportunity; put it off and slip behind.
The progress we have made is happening because we have faced those tough choices and made them together, inspired by our commitment to leave to others a better Commonwealth than we found.
I will just end by saying this. Americans rarely ever leave the things we decide are important entirely to chance. When we decided that educating our children was important, we created public schools and land grant universities. When we decided settling the west was important, we built the transcontinental railroad. When we decided freedom was important, really important, we freed the slaves and gave women the right to vote. It’s a journey. Right now, we’re going to have to decide whether accelerated growth is important enough to invest in or leave to chance. Fortunately for us, our grandparents didn’t leave the Mass Pike or I-95 to chance. They made choices that shaped a better future. Now it's our turn.
I looking forward to your partnership and support in these efforts.