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AIM Urges Governor to Sign Economic Development Bill

Posted by Brad MacDougall on Aug 6, 2014 9:12:33 AM

Associated Industries of Massachusetts urged Governor Deval Patrick yesterday to sign an economic development bill that would expand the research-and-development tax credit and create multiple initiatives to accelerate job growth.

Molecular_Structures.SmallIn a letter to the governor, AIM said that An Act Promoting Economic Growth across the Commonwealth contains provisions “that will have a positive impact on the Massachusetts business climate.”

The research-and-development tax provision creates an Alternative Simplified Credit (ASC) as an alternative to the traditional tax credit. ASC allows employers the option to claim a credit equal to 10 percent of any research expenses that exceed a base amount calculated over a period of three years.

Current law allows credits only for incremental R&D spending over a set base period in the 1980s.

AIM believes the changes are necessary to reverse a troubling 19.3 percent decline in R&D spending among Massachusetts employers between 2007 and 2011. The vast majority of research and development in Massachusetts takes place not in urban innovation districts, but in advanced manufacturing, defense and biopharma companies salted throughout the commonwealth

“And we know that R&D credits work. Massachusetts enacted a set of research and development tax incentives in 1991 that were among the most advantageous in the nation. Over the next five years, R&D spending in the commonwealth increased by more than 50 percent,” said John Regan, Executive Vice President of Government Affairs for AIM.

Other key provisions of the economic development bill include:

  • Sales Tax Exemption - Clarifies the eligibility definition in the state’s life sciences research-and- development sales-tax exemption law to include limited partnerships.
  • Financial Services Advisory Council – Creates a council to provide the governor with ongoing feedback and recommendations on the ways in which state policy impacts the banking and financial-services sectors.
  • Manufacturing Studies – Provides for a comprehensive study of the manufacturing industry by the Massachusetts Manufacturing Extension Partnership (MMEP) and a separate study of the manufacturing supply chain in Massachusetts.
  • Massachusetts Computing Attainment Network Program (MassCan) Promotes and expands computer science education in public schools. MassCan addresses the commonwealth’s need to train the next generation of computer science experts for the jobs of the future.
  • One-Stop Shop Business Portal - Enhances the manner in which Massachusetts government provides resources to business by directing the chief information officer of the Information Technology Division to create an online portal to serve as a one-stop shop for businesses seeking information to start or grow a business in the commonwealth.
  • Wireless Innovation – Makes Massachusetts the fortieth state in the last 30 years to embrace a national framework for the mobile industry. The framework recognizes the global environment in which businesses operate and encourages a policy environment that promotes innovation for the customer.
  • Proof of Concept – Creates the Innovation Commercialization Seed Fundto make initial investments with researchers and students at the University of Massachusetts and other research universities who have invented or developed concepts, goods or services that have commercial potential.

The Legislature passed the economic development bill in the early hours of August 1. Governor Patrick has the option to sign or veto the entire bill, veto individual sections of the bill, or send sections back to the Legislature with proposed amendments.

Topics: Research, Economic Development, Taxes

Budget Cuts Underscore Role, Vulnerability of Growth Industries

Posted by Christopher Geehern on Feb 22, 2013 1:37:00 PM

Massachusetts has outperformed the rest of the nation during the Great Recession and not-so-great recovery largely because of growth industries heavily funded by the government.

Budget CutsWe’re about to see just how important these industries – including defense, research, biosciences and medicine – are to the Massachusetts economy as federal policymakers appear ready to allow $85 billion in automatic spending reductions take effect a week from today.

Officials estimate that Massachusetts stands lose $127 million in federal research funding alone and several thousand jobs in the first year of the so-called sequester.

The $85 billion in spending reductions would cover the final seven months of the federal fiscal year, split equally between defense and non-defense programs. Exemptions would include Social Security, Medicaid and Food Stamps, with Medicare absorbing a smaller percentage cut — 2 percent compared to 8 percent for the Pentagon.

The cuts would total nearly $1 trillion over the next decade.

Not good news for a Massachusetts innovation economy that has provided much of the commonwealth’s economic and job growth during the past decade. Defense contracts to Massachusetts companies increased 83 percent from 2003 to 2011, supporting 130,000 jobs that represent 4.1 percent of employment in the state. Meanwhile, Massachusetts created more biotechnology research jobs than any other state in the country from 2007-2011.

The potential challenge for the growth areas of the Massachusetts economy is sobering:

  • The American Association for the Advancement of Science estimates that Massachusetts may lose $3.1 billion in federal research and development grants during the next five years.
  • Massachusetts brings in $2.5 billion each year in funding from the National Institutes of Health, more per capita money than any other state. Dr. Gary Gottlieb, president and chief executive of Partners HealthCare, told lawmakers this week that NIH research dollars support about 35,000 jobs in Massachusetts, and that sequestration reductions of $275 million annually could eliminate 2,600 of those jobs.
  • Throughout New England, defense supports about 320,000 jobs. Industry executives say a $300 million loss in funding would cost 3,300 jobs in just the first year of the sequester.
  • Defense and medicine are also significant generators of innovation and business formation in areas ranging from computer software to biosciences to nanotechnology. Economists worry that the creative soup of world-class universities, prestigious hospitals and renowned defense technology companies may cool to a low simmer in the wake of federal budget reductions.

Cuts are coming in one form or another to all of these industries, even if Congress and President Obama eventually replace the sequester with a long-term agreement to reduce the nation’s $16 trillion debt. But the prospect of getting an accelerated view of how important these sectors are to Massachusetts is more than a little unsettling.

Topics: Defense Industry, Research, Issues, Massachusetts economy

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