Governor Charlie Baker delivered the keynote address at the 2017 AIM Annual Meeting last week in Boston. The governor reviewed the accomplishments of his administration and ended with a passionate plea for bipartisanship.
Here is his full speech...
Governor Charlie Baker delivered the keynote address at the 2017 AIM Annual Meeting last week in Boston. The governor reviewed the accomplishments of his administration and ended with a passionate plea for bipartisanship.
Here is his full speech...
Governor Charlie Baker, speaking one day after a health-care bill once again passed the US House of Representatives without a single vote from the minority party, made a passionate case for bipartisanship in a speech to the AIM Annual Meeting Friday.
“In the end, you’re not measured by how many things you opposed but how many things you get done,” the governor told more than 850 business leaders gathered at the Westin Boston Waterfront hotel.
“I take tremendous satisfaction from the fact that we get along with people on both sides of the aisle.”
Governor Baker has worked closely throughout his first two years in office with the two top Democrats in the Massachusetts Legislature – House Speaker Robert DeLeo and Senate President Stan Rosenberg – on complex issues ranging from the MBTA and energy policy to the opiate crisis. The bipartisan approach has made the governor the most popular chief executive in the nation, according to polls.
“I’ve learned a lot from people I don’t agree with,” said Governor Baker, who said his entire staff prides itself on listening to ideas from throughout the ideological spectrum.
The governor’s speech highlighted an Annual Meeting celebration that featured presentation of 2017 AIM Vision Awards to Fidelity Investments, Bright Horizons Family Solutions and Woods Hole Oceanographic Institution. AIM also presented the John Gould Education and Workforce Development Award to Tech Foundry of Springfield.
Governor Baker highlighted several bipartisan initiatives he said have been cornerstones of his administration:
Bipartisan cooperation, the governor said, was one of the primary reasons that General Electric Company chose to locate its corporate headquarters in Boston. The company has often cited the collaboration between the Republican Baker and Boston Mayor Marty Walsh, a Democrat, as a factor in its decision to move from Connecticut.
Governor Baker praised the work done by AIM to represent the interests of employers in public-policy debates.
He praised the association for its willingness to “speak candidly and straight about issues it cares about.”
Governor Charlie Baker yesterday described his proposal for a $300 million health assessment on employers as an attempt “to wrestle with the fact that a huge portion of people who are working full-time are either not taking coverage that's available through their employer and going on MassHealth, or are working for people who aren't offering them coverage at all, and going on MassHealth."
He added, according to State House News Service, that “the centerpiece of this budget really is a smart and common-sense approach to address the problem of costs being shifted from private sector employers for their employees onto state government."
Set aside for the moment the questionable premise of rampant cost shifting in a commonwealth where 76 percent of employers offer health insurance compared to 55 percent in the rest of the country.
The important point is that the governor’s sweeping proposal goes far beyond targeting employers who offer no health insurance, and instead penalizes employers who already offer high-quality insurance coverage to their employees.
It appears that money, not fairness, is driving the new fair-share assessment.
The administration plan would impose a $2,000-per-employee fee upon companies at which at least 80 percent of full-time worker equivalents do not take the company’s offer of health insurance, and that do not make a minimum contribution of $4,950 annual contribution for each full-time worker. If 70 percent of a company’s employees accept company health insurance, the company would be assessed $2,000 per employee for the number of employees represented by the 10 percent difference.
The employer assessment, which would bring an estimated $300 million into state coffers, represents a revival of the so-called fair share contribution plan that was a linchpin of the 2006 universal health care law in Massachusetts before it was repealed to make way for the federal Affordable Care Act. The state employer mandate was repealed in 2013 as lawmakers and former Gov. Deval Patrick worked to bring Massachusetts into compliance with federal health-care reform.
AIM asked multiple employers of varying sizes to determine whether they would be subject to an assessment under the governor’s plan. Every one of the companies, from small manufacturers to international financial institutions to corner retailers, reported that they would face assessments. Most fell short of the 80 percent threshold because of employees using spousal health plans or because of the calculation of full-time equivalent employees.
“There is widespread concern among responsible employers that they are being dragged into an assessment intended for companies that provide no health coverage,” said Katie Holahan, Vice President of Government Affairs at AIM.
Holahan said AIM has developed an online calculator that will allow employers to determine how much they might owe under the governor’s proposal.
AIM opposes the employer assessment because the growing shortfall at Masshealth, which provides health insurance to 1.9 million low-income Massachusetts residents, is attributable solely to problems arising from the federal Affordable Care Act (ACA), a law that may well be repealed by the time Massachusetts solves its Medicaid problems.
ACA made access to health insurance an entitlement based on expanded income eligibility. Under the Massachusetts health care reform law of 2006, employees who were offered employer-sponsored health insurance were ineligible for MassHealth. The ACA reversed that policy and allowed employees to decline employer coverage and still seek insurance through MassHealth.
The change created a migration of newly-eligible individuals from their employer-sponsored insurance to MassHealth, substantially increasing the commonwealth’s financial burden. ACA made it an economically rational choice for eligible residents.
As MassHealth enrollment grows, the commonwealth experiences the reality that employers have faced for years - the high cost of health care coverage in this state threatens the underpinnings of the state economy. This challenging moment underscores the fact that policymakers have concentrated too heavily on access issues instead of controlling the cost of health insurance, and now face a renewed imperative to lower costs for everyone in Massachusetts.
AIM looks forward to working with the administration and the Legislature to find a fair solution to the commonwealth’s challenging health-care financing issues.
The Baker Administration filed a budget proposal today that, as expected, would impose a $2,000-per-employee tax on some employers to close a deficit in MassHealth. AIM opposes the assessment as unfairly burdening employers for a problem they did not create.
Which employers will be subject to the assessment? Here is an infographic that summarizes the administration proposal. AIM is developing a calculator that will allow employers to determine exactly what their costs will be under the new assessment.
If you have any feedback or questions about this proposal, please contact Katie Holahan at firstname.lastname@example.org or 617.262.1180.
Editor's note - Kristen Rupert, Executive Director of the AIM International Business Council, traveled to Israel earlier this month as part of Governor Charlie Baker's trade mission.
Governor Charlie Baker’s recent trade mission to Israel took place at a propitious time for US-Israel relations.
The first two (of an order of 50) F-35 fighter jets were delivered by the US to Israel while the Massachusetts trade delegation was participating in meetings in Tel Aviv. These state-of-the-art, manufactured-in-the-US, stealth aircraft were flown from the US to an Israeli airbase in the Negev where they were greeted by Israel Prime Minister Benjamin Netanyahu, US Defense Secretary Ash Carter, US Ambassador to Israel Daniel Shapiro, and a large crowd of US and Israeli military personnel.
Against this backdrop of goodwill between the US and Israel, Massachusetts executives spent four days in panel discussions, informational briefings and networking sessions with Israeli counterparts in the digital health and cybersecurity sectors. A few examples:
Two panels on cybersecurity, featuring chief security, tech and information officers from Harvard, the Federal Reserve, Raytheon, IBM, Akamai and Beth Israel Deaconess, addressed the challenges of staying ahead of the “bad guys.” Lessons learned: think of cybersecurity as an investment and not a cost for your company, continue to add security features for log-ins and data access, and communicate regularly to employees—nearly all of whom carry a mobile device—about the critical importance of protecting company and personal data.
On research and innovation, Governor Baker and Israel’s Chief Scientist spoke at a half-day session, convened by GE, about complementary strengths in Massachusetts and Israel. Both leaders spoke about the value of collaboration among government, private industry, and universities. Massachusetts is historically strong in technology and our defense legacy is helping us grow a cybersecurity ecosystem. Israel spends more per capita on research and development than any country in the world and the government funds start-ups in all industries at all stages. Both Israel and Massachusetts have strong talent pools from which to hire—yet both are struggling with the need for additional skilled workers.
Governor Baker stressed the “powerful possibilities” of collaboration between the Bay State and Israel. Strong ties already exist. Many Israeli doctors and health-care researchers trained or practiced in Massachusetts. More than 200 Israeli-founded companies are thriving in the Boston area. Thrice-weekly non-stop flights between Boston and Tel Aviv already carry university professors, students on internships, private industry leaders, medical professionals and government officials.
Several Memoranda of Understanding focused on cybersecurity and technology were signed by Massachusetts government officials and their Israeli counterparts during the trip. Now back home, trade mission delegates are already talking about how to launch and nurture additional collaborations and encourage Israeli start-ups to come to Boston.
Governor Baker said it best when he invited company founders to consider Massachusetts “your home away from home.” Certainly the recent trade mission reinforced the strong desire by Israelis and Bay Staters to work even more closely together over the next few years.
Governor Charlie Baker and Massachusetts business leaders are using their current trade mission to Israel to broaden the already close economic ties between that nation and the commonwealth in key areas such as cybersecurity and digital health.
Baker, reflecting on the common values and strengths shared by the Bay State and Israel—technology, innovation, intellectual intensity—is encouraging Israelis to think of Massachusetts as their “home away from home.”
Nearly a dozen AIM member companies, including Raytheon, Eversource, Beth Israel Deaconess Medical Center (BIDMC), Harvard, IBM, GE, UMass, Blue Cross Blue Shield, Goodwin, Sanofi and Cyberark, are participating in the economic development mission to Tel Aviv and Jerusalem.
Today, several dozen Israeli entrepreneurs planning to expand into the US in the next 24 months indicated strong interest in selecting Massachusetts as the destination for their young firms. Their demonstration of enthusiasm occurred at the US-Israel Growth Summit at Tel Aviv University, which was sponsored by Raytheon and attracted nearly 300 Israeli business leaders. To encourage the Israelis to choose the Bay State over Silicon Valley or New York City, a panel of four Massachusetts-based Israeli-founded company executives, including AIM member CyberArk CEO Udi Mokady, shared why they moved their businesses to Boston.
Why is Boston so attractive to Israeli entrepreneurs? Talent, customer access, a strong tech ecosystem, research capabilities, reasonable time difference between Boston and Israel, and cultural fit. In fact, more than 200 Israeli-founded businesses can be found in Massachusetts today, with more than 9,000 direct employees and more than $9 billion in direct economic impact. The number of Israelis living in and around Boston exceeds 200,000.
Massachusetts executives also have a lot to learn from Israeli counterparts, especially in the areas of cybersecurity and digital health. Yesterday’s agenda included a visit to Israel cybersecurity firm Team8, comprised of former officials of Israel’s elite military unit known as 8200. The company’s CEO/co-founder emphasized that the best way to approach cybersecurity challenges is to understand the psychology of the people behind the malware and attacks.
Meetings between and among Massachusetts and Israeli government and industry leaders this week have been productive. Discussions are underway about possible collaborations, partnerships, student exchange programs, internships and investments that will benefit Israeli and Massachusetts companies.
One such collaboration was announced today when Massachusetts and an Israeli company formally agreed to work together on cybersecurity research, training and academic exchanges. The Massachusetts Technology Collaborative and the Israeli non-profit private organization CyberSpark signed a memorandum of understanding, pledging that the organizations would collaborate on research focused on healthcare technology cybersecurity and practical training in cybersecurity for American and Israeli students.
The upcoming Massachusetts trade mission to Israel will emphasize cybersecurity and digital health, two industries in which Governor Charlie Baker says the commonwealth has an opportunity to become a powerful worldwide player.
Baker told more than 150 business leaders and diplomats at the 2016 AIM Global Trade Symposium this morning that cybersecurity and digital health are related because digitally driven insulin pumps and other medical devices must be invulnerable to software hackers.
“Cybersecurity will become the prerequisite for digital health,” Baker said during a keynote speech at Gillette Stadium in Foxboro.
“When we get onto the idea of medical devices designed to monitor health status…the whole idea of breach in something like that is not a shrug-the-shoulders kind of moment.”
The governor said Massachusetts remains well positioned to increase exports because of significant upgrades to the infrastructure for moving products from the Bay State to overseas destinations by sea and by air. He noted the expansion of direct overseas flights at Logan International Airport, the dredging of Boston Harbor, and the expansion of the Connelly Terminal in Boston as important steps to ensure that Massachusetts employers will continue to have access to foreign markets.
The AIM Symposium honored three Massachusetts companies with Global Trade Awards for excellence in international business - REXA of West Bridgewater, L-3 Security & Detection Systems of Woburn, and Riverdale Mills Corporation of Northbridge.
“International trade plays a pivotal role in the health of the Massachusetts economy” said Richard Lord, President and CEO of AIM.
“That is why we are delighted to honor the achievements of these local winners, who set the standard for global business. These firms are making a significant contribution to Massachusetts’s reputation as a world trade leader. ”
Employers and academics at the Symposium agreed that uncertainty hangs over international commerce in the form of a strong dollar, weakness in key export markets, the impending exit of the United Kingdom from the European Union and a rising tide of protectionism both in the U.S. and abroad. Several companies reported that the rising dollar and falling shipping costs are bringing new, low-cost competitors into many overseas markets.
“The uncertainty level has certainly gone up in the past several years,” said, Ravi Ramamurti, Distinguished Professor, Northeastern University’s D’Amore-McKim School of Business, who led a panel discussion on “Tough Times for Trade.”
He added that the slowing growth in Europe and Asia appears to be structural rather than cyclical in nature.
The effects of currency shifts and other factors vary widely depending on industry, geography and the ability of a particular business to adapt.
“Volatility creates opportunity,” said Charlie Cunnion, Director of Global Transportation for International Forest Products LLC, the largest exporter in New England.
“When things are difficult, that’s when we shine the best,”
The chairman of the Associated Industries of Massachusetts Board of Directors yesterday joined more than a dozen other AIM members as part of a council that will help the Baker administration develop a long-term economic plan for the commonwealth.
Daniel Kenary, chief executive officer and co-founder of the Harpoon Brewery who took over as chair of AIM in May, will formally represent the association on the governor’s Economic Development Planning Council. The council, chaired by Secretary of Housing and Economic Development Jay Ash, must submit its economic plan to the Legislature by the end of the year.
“The Planning Council offers an opportunity for engagement with business, public, and non-profit sector leaders on a wide range of economic development priorities and programs,” said Governor Charlie Baker. “Their invaluable experience will help guide our planning and implementation, and I look forward to continued partnerships as we work to develop Massachusetts’ economy, and ensure that communities across the commonwealth share in our economic growth.”
The council is expected to address many of the same business-development challenges that AIM included in its centennial Blueprint for the Next Century plan. Issues such as regulatory reform, workforce development, business costs and innovation are expected to dominate the agenda.
Kenary will be joined on the council by three fellow AIM directors - Andrew P. Botti, Esq., Director, McLane Middleton Law Firm; Jeevan Ramapriya, Vice President, State Street Bank and Trust Co.; and Ralph Smith, Chief Executive Officer, President and Director, Kayem Foods Inc.
Other members named to the council include:
Public-sector participants include the co-chairs of the Legislature’s Joint Committee on Economic Development and Emerging Technology, Senator Eileen Donoghue and Representative Joseph Wagner. Administration and Finance Secretary Kristen Lepore, Labor and Workforce Development Secretary Ron Walker, Energy and Environmental Affairs Secretary Matthew Beaton, and Transportation Secretary Stephanie Pollack are also part of the panel.
“AIM is an association of employers so we are delighted that Dan Kenary and other talented employers are part of the Economic Development Planning Council. No one can help the Baker administration better understand the challenges of job creation than the people actually creating jobs here in Massachusetts,” said Richard C. Lord, President and Chief Executive Officer of AIM.Massachusetts law requires the appointment of an economic development planning council, and the filing of an economic development plan, within the first year of each new gubernatorial administration. The Council will convene again for the second and final time on December 9 to offer its final recommendations
A manufacturing company in Berkshire County pays an average of 12.87 cents per kilowatt hour for electricity.
Move that company several miles to the west, over the New York border, and the cost drops by more than half, to 6.15 cents per kilowatt hour.
Remember those numbers when someone tells you that electricity costs don’t affect where companies locate and create jobs. The difference can add up to millions of dollars per year and hundreds of jobs.
The corrosive impact of high electricity costs on the state economy will be front and center tomorrow as Associated Industries of Massachusetts testifies on multiple bills pertaining to solar power and hydro power. The hearing underscores the responsibility of policymakers to refocus Massachusetts energy policy around the one figure largely forgotten in the often esoteric political debates over power – the ratepayer.
It’s the same ratepayer who foots among the highest electricity bills in the country. The same customer whose rates have surged 56 percent during the past decade versus 38 percent for the nation as a whole. The same employer and citizen who have suffered massive increases for several years in winter electric rates because the commonwealth lacks adequate infrastructure for natural gas and hydro power.
“High energy costs have real consequences for some of the most important industries in Massachusetts, from advanced manufacturing to hospitals to colleges and universities,” says Robert Rio, Senior Vice President of Government Affairs for AIM, who will testify before the Legislature’s Joint Committee on Telecommunications, Utilities and Energy.
“Energy policy must fundamentally be about cost and competitiveness. Massachusetts must use competitive market forces to determine the most efficient and cost-effective methods for generating and transporting power to the Bay State.
AIM will oppose five bills that would force Massachusetts employers and consumers to purchase significant amounts of electricity generated under long-term contracts with hydro, wind and solar generators. Employers generally support diversification of energy sources and use of renewable energy, but none of the six bills alone will increase the reliability of the electric system at the lowest possible cost to consumers.
All of the bills in one way or another establish long-term contracts for large hydropower or other renewables. The bills together would authorize nearly 2,700 megawatts of power - more than four times the electricity generated by the Pilgrim nuclear power plant – to come from renewables and hydro power under long-term deals without adequate protection for ratepayers.
The impact of long-term contracts on electricity prices could be severe and lead to unintended detrimental changes in the way customers use electricity
Given the large amount of power, even small price discrepancies would have large economic consequences. For instance if just 1,700 megawatts are contracted and the difference is 6 cents per kWh average the additional burden is nearly $1 billion per year to ratepayers.
AIM will also oppose a Baker Administration proposal to expand the commonwealth’s dysfunctional solar-energy subsidy program. The measure would add $600 million to ratepayer bills by 2020 on top of the $4 billion that business and residential customers are already paying to subsidize solar installations.
The solar program, referred to as net metering, creates a system in which virtually all the savings (except for wholesale fuel costs) attributable to solar installations are a transfer from non-participating ratepayers to those who have solar, increasing costs for those who may not be able to take advantage of solar programs. If everyone took advantage of solar programs, there would be no ratepayers left to pay the cross-subsidy.
Additionally, as solar programs increase, there are fewer customers to pay the cost associated with maintaining the distribution and transmission system, which is still required to be ready willing and able to serve the customer when the sun is not shining. Solar customers also fail to pay their fair share of social costs embedded in distribution rates, causing a massive shift in who pays for programs that serve low-income customers.
“Reducing the cost of solar programs and electricity should be the highest priority. Massachusetts ratepayers are not only spending an enormous amount of money for solar power, we are spending at rates double any other state,” Rio says.
AIM seeks a market-based approach once Massachusetts hits its objective of 1,600 megawatts of solar generation.
Governor Charlie Baker, legislative leaders and the business community have reached a compromise on the controversial corporate tax change that was inserted into the state budget to pay for an extension of the Earned Income Tax Credit for low-income workers.
The agreement means the so-called FAS 109 deduction will be delayed for five years instead of repealed, as recommended a week ago by the legislative conference committee hammering out a budget for the fiscal year that began July 1. The time period over which a company may claim its overall deduction will be increased from seven to 30 years.
The deal follows several days of intense negotiations among employers, business associations, the Baker administration, House Speaker Robert DeLeo and Senate President Stanley Rosenberg. Associated Industries of Massachusetts supported the expansion of the earned income tax credit (EITC), but opposed the repeal of the FAS109 provision.
“We all agree that expanding the Earned Income Tax Credit is a critical tool to provide tax relief to over 400,000 low income individuals and working families and my administration believes in providing a stable, competitive business climate to encourage economic development across the Commonwealth,” Baker said.
“In that effort, we have reached a joint compromise to extend the delay of the FAS-109 deduction implementation for five years and extend the length of the deduction’s life from seven to 30 years, minimizing the annual revenue impact on the state budget. I am pleased the legislature is ready to act on these new parameters for the FAS-109 deduction by the end of July.”
Verizon and other companies that stood to be affected by the repeal, expressed support for the compromise.
"Governor Baker, Senate President Rosenberg and Speaker DeLeo continue to find ways to work together to address some of the tough problems facing our Commonwealth. Increasing the Earned Income Tax Credit helps low income workers when they need it the most,” said Donna C. Cupelo, Region President – New England for Verizon.
“Embracing a new approach to the FAS 109 provision recognizes that we have capital-intensive companies that steadily invest in the infrastructure that forms the platform for our economy. When we match fair policies with the right investments in people and infrastructure, we make Massachusetts a stronger global competitor. "
Employer groups, including AIM, also applauded the agreement.
“As representatives of the state’s business community, we applaud you for finding a solution that both preserves the 2008 agreement on the FAS 109 deduction and extends tax relief to the state’s hard working residents by raising the state’s Earned Income Tax Credit,” said a letter sent within the hour to Baker, DeLeo and Rosenberg from Associated Industries of Massachusetts, the Massachusetts Taxpayers Foundation, the Massachusetts Business Roundtable and the Greater Boston Chamber of Commerce.
“This agreement provides certainty for the state’s businesses regarding the FAS 109 deduction for several years, and such predictability is critical for economic growth and business development. We are grateful for your recognizing this, for the collaborative manner you brought to these discussions, and for the hard work of your dedicated staff.”
Proposed repeal of the deduction of the FAS 109 deduction would have reversed an agreement reached between business and the Legislature as part of the 2008 “combined reporting" tax policy change. The repeal would have caused significant financial harm to capital-intensive national and global companies.
The combined reporting law brought income from companies' operations in other states into a unitary or "combined" Massachusetts return. The FAS 109 deduction was adopted to avoid penalizing companies after the fact for making capital investments. FAS 109 is an accounting standard that requires that financial statements reflect the tax consequences of all book/tax differences.
The governor signed most of the remaining $38.1 billion Fiscal Year 2016 budget, which includes no broad-based tax increases and makes substantive public-transportation reforms.
The MBTA reforms included in the budget provide Baker with many of the tools he is seeking to overhaul the transit agency. The budget would suspend for three years the onerous privatization vetting of the Pacheco Law, give the secretary of transportation the authority to hire an MBTA general manager, increase the size of the state Transportation Board and create a temporary fiscal and management control board for the T.
The governor also made $162 million in line-item and outside sections vetoes, including $38 million in earmarks.