Governor Deval L. Patrick
Small Business Jobs Bill Remarks
Greater Boston Chamber of Commerce, Copley Westin, Boston, MA
Wednesday, February 10, 2010
Governor Patrick unveiled a small business jobs bill today. Among other measures, the bill 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.
For more information, please visit www.mass.gov/governor/jobs
Address as prepared
Good morning and thank you for having me today.
I want to spend most of our time in conversation, but let me offer a few comments first about where we are as a Commonwealth and where we are going.
To say the obvious, this is the worst economy in living memory. People and businesses - perhaps some of yours - were hammered last year by economic forces beyond any of our control. Most state and local governments across the country have been managing through consequent fiscal crises of their own.
In the case of state government in Massachusetts, we faced $9 billion in budget gaps. So, we cut many worthy programs and services, eliminated over 2,200 jobs (with more to come), got contract concessions from labor unions (the first administration ever to do so), imposed furloughs, froze pay, and otherwise managed costs down. In other words, we did what every business and family has had to do: make do with less.
But we closed that budget gap, and delivered three budgets that were responsible, balanced and on time - not something many other states can say. Our budget still keeps faith, as best as possible, with our commitment to help the people of Massachusetts weather these hard times and build a lasting recovery. Because that, especially in times like these, is what government is for.
Slowly but surely, the Massachusetts economy is coming around, with the innovation industries -- IT, biotech and life sciences, clean tech, health care -- leading the way. The business climate is improving: CNBC ranked us the 8th best state in the nation in which to do business (up from 15th a year ago). Business confidence has improved 10 of the last 11 months. All three national rating agencies - Standard & Poor's, Fitch and Moody's - have affirmed the state's AA bond rating and stable outlook for the future, expressly citing our successful management through this fiscal crisis. Independent economists predict that Massachusetts is recovering faster, sooner and stronger than the rest of the nation. And for the first time in 20 years, young people and families are moving into Massachusetts instead of moving out.
Meanwhile, many good things are happening, some in spite of the crisis and some because of it.
Our students rank first in the Nation on achievement standards for three years running, and number one in the world in science. Not by accident. And with the help of teachers, parents, policymakers and many of you in this room, I was proud to sign a sweeping education reform bill last month that will bring more innovation into our public schools -- especially those that have too often failed poor children -- and finally address the achievement gap.
We are first in the Nation in health care coverage for our residents, with over 97 percent insured. Again, not by accident. With the help of providers, insurers, unions and, once again, many in this room, we have developed the most far-reaching strategies in the country to bring costs down.
Our clean and alternative energy initiatives set national standards. We are on track to increase wind power 10-fold and solar power nearly 20-fold by next year. Not by accident. In the solar industry alone we have quadrupled the number of installation companies and more than doubled the number of jobs.
We have fixed some of the most intractable problems on Beacon Hill.
We ended decades of abuse and gamesmanship in the state pension system, like the "23-years-and-out" rule or the "king-for-a-day" rule.
We tightened the ethics and lobbying rules, so that people who are influencing legislation have to come clean to the public about what they are doing and on whose behalf.
We radically simplified the transportation system, abolishing the Turnpike Authority, consolidating the rest of the agencies into the new MassDOT, and saving the state over a quarter billion dollars already.
We brought competition to the auto insurance market, which has cut average premiums by nearly 10 percent, saved drivers $270 million in the first year alone, and brought 11 new companies and hundreds of new jobs into the insurance market here.
We joined our peers in all 49 other states by putting civilian flaggers on state road projects.
And by the way, we cut the corporate tax rate -- from 9.5 percent to 8.75 percent starting this year. It will keep coming down to 8.0 percent over the next two years, a savings to some 35,000 Massachusetts companies. Add to that a host of tax credits and incentive programs and we have a set of stronger tools to encourage investment and growth.
The combination of state bonding authority and federal stimulus funds have enabled us to invest more in our infrastructure than any other administration in decades. And that's a good thing because the level of neglect we inherited is shocking; economic and personal security as well as quality of life demand that we turn that around. So there are road, rail and bridge projects (nearly 500 of them underway right now), broadband expansion, public and affordable housing restoration, college campus renovations, open space preservation and more happening in every corner of the Commonwealth. We have cut the number of structurally deficient bridges by almost 10 percent already, and have doubled the highway reconstruction program in just the last two years. All of that means jobs right now and value over time.
And while we're at it, let's just clear up a couple of misperceptions about our management of federal stimulus funds. We have met or beaten every deadline in the law and are consistently ranked in the top ten states for effectiveness in moving the dollars out the door and on the ground. Over 25,000 teachers, firefighters, police officers, construction workers and other jobs have been saved or created in Massachusetts because of federal stimulus.
The other misperception out there is that the stimulus bill was just a big blank check payable to me, and that you just have to get me in a good mood to get some of it. In fact, most of it is limited to very specific uses. So we have used every opportunity to find ways to leverage the federal funds to generate private investment and create more jobs.
For example, some of you will know about the State Revolving Fund, which defrays the cost of municipal drinking water and wastewater systems. Before the Recovery Act, we had roughly $400 million dollars for 71 projects in the queue this year. With the stimulus money, we took a little extra time and were able to leverage that $400 million to nearly $800 million, and those 71 projects to 115 projects, which means about 4,000 new construction jobs over the next year.
Another important example: we received over $437 million in stimulus highway funds, all of it committed to specific projects. But instead of simply repaving roads, as valuable as that is, we prioritized as many road projects as possible that would leverage additional private investment, like the Assembly Square project in Somerville or the Quincy Concourse project in downtown Quincy. In addition to creating one or two hundred short-term road construction jobs, these improvements also spur commercial development and thousands of construction and permanent jobs for years.
Our new Life Sciences Center has leveraged more than $180 million of public funding into $680 million of additional investment, with the prospect of over 6,000 permanent and construction jobs. In December, the Center awarded $25 million in tax incentives to 28 companies that will create more than 800 jobs in the Commonwealth this year alone. Because we have established our unequivocal global leadership, 1 in every 5 biotech venture capital dollars comes to the Commonwealth today, and 14 percent of the SBA's innovation research grants. Genzyme is adding at least 500 new workers this year in Massachusetts. Arteriocyte, a Hopkinton-based biotech company developing proprietary stem cell and tissue engineering based therapies, doubled in size last year and grew their revenue by 45 percent. And for those who think these jobs are all in the lab, consider Systagenix, a UK-based medical device company, that recently created 27 jobs in Quincy when they opened their Headquarters for the Americas - none of those jobs in the lab, but in IT, human resources, customer care and sales and marketing. And we have major biotech construction projects underway on the Cape, in Metrowest, and in Worcester County -- jobs for today and tomorrow.
I mentioned the extraordinary progress we have made in the clean tech sector. Last week, we awarded $21 million in stimulus money to Nexamp Inc. of North Andover and Florence Electric of Taunton to install solar-energy equipment at 12 public drinking water and wastewater treatment plants, the state's largest-ever contract for installation of solar power. That's another 100 jobs this year. In Watertown, A123 Systems is developing advanced batteries for electric and plug-in hybrid cars - and adding 150 jobs here in Massachusetts this year. Massachusetts will be the nation's leader in energy efficiency over the next three years, saving residents and businesses $6 billion and creating an estimated 4,000 jobs for people modernizing light fixtures, replacing old furnaces and air conditioners, and weatherizing houses.
From the very beginning of our administration, our number one goal has been to create jobs and a stronger economic foundation for the people of Massachusetts. The economic crisis has not deterred us. There is a lot that's good going on in Massachusetts. But we need to do more.
Small businesses account for 85 percent of Massachusetts businesses, and for them this is an economic emergency. If we want new jobs, we need to focus special attention on meeting their needs. That means addressing their need for access to working capital and credit, helping to 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.
So today, we are announcing emergency measures to help small businesses stabilize and grow jobs. Our plan has 6 components.
First, businesses with 50 employees or fewer will receive a $2,500 tax credit for each net new job created and retained for at least one year. Credits will be distributed on a first-come-first-serve basis up to a total value of $50 million. We estimate that this will encourage the hiring of up to 20,000 people.
Second, through the merger of three existing quasi public agencies and a modest bond capitalization, we will establish a $40 million Growth Capital Fund. The Growth Capital Fund will serve as a one-stop shop for the financing and technical assistance needs of small businesses. The Fund will have broad authority to use its resources to leverage private funds, including through loan guarantees, to ensure that the state's thousands of small businesses have the capital and advice they need to grow and start hiring.
Third, we will use existing powers - as well as additional tools - to hold down health insurance premiums for small businesses.
Today, I am directing the Commissioner of Insurance, on an emergency basis, to require health insurance companies to file any increases or changes to rates before they take effect and to disapprove the increases if they are unreasonable or excessive. Any increases significantly higher than the current level of medical cost inflation, which today is 3.2 percent, will be challenged. This is aggressive, but we have to give small businesses some economic breathing room until we can implement the kind of payment reform that will curtail costs across the health care system.
Controlling health care costs is a shared responsibility, and we have to look at the market conduct of both carriers and providers. That is why we will also file legislation to implement an oversight plan to screen provider rate increases. It is essential that there be full transparency and accountability in what consumers pay for health care and what providers charge insurance companies.
Fourth, we will freeze unemployment insurance rates at the 2009 rate, schedule E, which is projected to save businesses $391 million or an average of $158 per employee. We will also seek to provide for the long-term solvency of the system and make some other changes that will benefit the system.
Fifth, we will segregate the workforce training funds that businesses contribute now into a separate trust, dedicated exclusively to the original mission, namely the training of workers.
Last is a collection of additional supports for business, such as another $50 million for the highly successful Growth Districts Initiative; extending existing land use permits for 3 years to enable developments to move forward as financial markets recover; increasing flexibility for tax-increment financings of the public infrastructure needed to support private development; and requiring state agencies to evaluate the impact on small business of any proposed regulation.
If anyone here has better ideas on ways we can help small businesses, I hope you will pass them on during the Q&A or by contacting the office. We welcome good ideas from any source.
I want to add that we are working closely with the Senate President on an initiative to consolidate many of the remaining quasi-public agencies and executive agencies responsible for economic development, and with the Speaker on workforce development.
Each and every one of these measures is about improving the commercial climate and creating jobs. They are also about restoring people's optimism, about opening new avenues of opportunity. We need to reach for this together.
That's why we brought together 150 corporate, academic and non-profit leaders for an Economic Summit last October and worked together on how we could best speed up recovery for Massachusetts. The bill I have outlined this morning delivers on many of the ideas that came out of that discussion.
Our future is bright. I am confident of that. But I am not content to leave our future entirely to chance, and I have shown that I am willing to make the tough call if it's the right one, even if that risks upsetting powerful interests.
My grandmother used to say, "hope for the best; and work for it."
That's why we invest in education, pre-K through college, because education is our calling card around the world.
That's why we cultivate the life sciences and biotech, with a billion-dollar initiative over ten years that has made us an international hub and is well on its way to transforming both the future of human health and the economics of health care.
That's why we have grown the clean tech sector, by creating new incentives for solar and wind installations, building the largest wind-blade testing facility in the nation (now under construction in Charlestown), designating ocean areas for off-shore wind projects, implementing new efficiency measures for public buildings and private homes, and multiplying the skilled and unskilled jobs.
And that's why we keep trying to remake and open up state government, as an expression of the things we choose to do together, so that it serves the greater good.
A 9-year-old named Justin asked me recently whether I like being governor. When I answered "yes" without hesitation, the adults nearby giggled with disbelief. It is an honor to serve, even in the toughest of times. But I am not motivated by the usual things that motivate people in elected office. I am not motivated by ambition for higher or other office, or by entitlement or powerful connections urging me on. I am motivated by simple gratitude. I came here 40 years ago when I was 14 from a life of poverty on the South Side of Chicago. From that day forward, Massachusetts people and families and businesses and institutions have given me more opportunities to learn and grow and prosper than most kids from the South Side can even imagine. I owe something. Gratitude makes me want to give something back.
And the thing I want to give is a better chance for someone else. A better school. A better job. A better community. A better government. A better future. Work with me, and I am certain we can shape a brighter tomorrow.
Thank you again for having me. I look forward to your questions.