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Senate Energy Bill: Christmas for Special Interests

Posted by Bob Rio on Feb 13, 2018 8:58:57 AM

Some members of the Senate don’t want you to spend all those recently announced savings on your electric and gas bills just yet.

solarpanels.small.jpgWeeks after federal tax reform generated rate reductions of $56 million for Eversource electric customers and $36 million dollars for National Grid gas customers, the Senate Committee on Global Warming and Climate Change released an energy bill yesterday that will take all the savings back from the wallets of consumers.

Proponents claim these proposals will reduce the threat of climate change. They will not. Instead, the bill has become Christmas in February for energy related special interests. 

The 71-page bill, still under review by AIM, contains unnecessary and redundant programs just a year after the Legislature passed and Governor Charlie Baker signed another omnibus energy measure that brought competitive bidding to the procurement of clean energy. Massachusetts has already committed to a goal of 80 percent clean energy by 2050.  Legislating more will not make it happen faster – it will just increase prices for something we are already on track to meet.

The bill includes:

  • A requirement for the Secretary of Energy and Environmental Affairs to develop a new “market-based compliance mechanism” on carbon emissions from transportation. The mechanism is better known as a carbon tax.  AIM supports imposition of a tax on carbon only if the money is used exclusively to invest in programs, including public transportation, that reduce fuel use. The current bill passes such discussions off to a regulatory process.  
  • A mandated increase in the amount of renewable power purchased by energy suppliers. Last year’s energy bill required the state’s utilities to purchase large amounts of offshore wind, hydropower and onshore wind as part of the largest competitive procurements for power ever in Massachusetts.  The results of these competitive bids are currently under review by the Department of Energy Resources (DOER) and the Department of Public Utilities (DPU). AIM believes lawmakers should let the current process play out before layering addition regulations on top.
  • An increase in subsidies (net metering) for solar development. The provision sounds good, but is unnecessary. The commonwealth unveiled a new competitive solar program in August that has already  reduced the cost of solar energy by nearly 50 percent. Let the new program work.

Employers urge the new Senate President, Harriet Chandler, and House Speaker Robert Deleo to take no action on the energy bill since many of the proposals are already set in motion. Give the current programs time to be implemented in a manner that creates benefit for the ratepayer, not special energy interests.

Interested in updates on energy issues? Contact Bob Rio at rrio@aimnet.org. 

Topics: Massachusetts senate, Environment, Energy

Supreme Court Hears Challenge to Graduated Tax Proposal

Posted by Brad MacDougall on Feb 6, 2018 10:49:37 AM

Lawyers for five prominent business leaders, including AIM President Rick Lord, argued before the Massachusetts Supreme Judicial Court today that a proposed surtax on incomes of more than $1 million violates the state constitution.

Adams Courthouse.jpgThe business leaders are challenging a proposed 2018 ballot question that would amend the state constitution to impose a graduated income tax and direct the revenue to be spent on transportation and education. The amendment would add a new four percentage-point tax (representing an 80 percent increase in the personal income tax rate) on all incomes more than $1 million. 

The plaintiffs assert that the proposal is riddled with constitutional flaws. It combines a graduated income tax that has been rejected five previous times by Massachusetts voters with attractive spending in a prohibited manipulation of the vote called “logrolling.”

And it does something that has never been done before: never in the history of Massachusetts has a tax or tax rate been set in the constitution, making the new tax essentially permanent and unchangeable. 

Attorney Kevin Martin of Goodwin Procter, who represents the business leaders, argued that it is critical to understand the difference between typical initiative petitions (also referred to as ballot questions) that amend state statutes, and this ballot question that would change the Massachusetts constitution and strip the Legislature of its ability to easily amend the policy in the future. Only three initiative petitions to amend the constitution have ever appeared on the ballot. 

The named defendants in the lawsuit are Attorney General Maura Healey and Secretary of State William Galvin. 

The court today pressed advocates of the ballot question and the Attorney General’s office about the issue of combining the seemingly separate issues of a tax increase and funding for transportation and education.

“Why not add energy, health care, pension reform?” asked Associated Justice Scott L. Kafker, who mused that voters were apparently being asked to render a decision on three distinct policy matters within a single ballot question.

“So, what is the unified public policy here?” added Associated Justice Elspeth B. Cypher.

AIM opposes the graduate-tax proposal on a policy basis because it would harm thousands of small and medium-sized business that pay taxes on an individual basis. The Massachusetts Department of Revenue estimates that 80 percent of the returns that would be affected by the surtax include some amount of business income.

The five plaintiffs in the suit are: Christopher Anderson, President of the Massachusetts High Technology Council, Inc. (MHTC); Christopher Carlozzi, Massachusetts State Director of the National Federation of Independent Business (NFIB); Richard Lord, President and Chief Executive Officer of Associated Industries of Massachusetts (AIM); Eileen McAnneny, President of the Massachusetts Taxpayers Foundation (MTF); and, Daniel O’Connell, President and Chief Executive Officer of the Massachusetts Competitive Partnership (MACP). 

“We appreciate the careful consideration the SJC is giving this case, which is the first since 1937 to involve an initiative petition to amend the constitution.  Their questions to both sides were thoughtful and probing, and we await their decision,” said Martin.

Conact Brad MacDougall a bmacdougall@aimnet.org to receive updates on this issue.

Employers Begin 2018 on Confident Note

Posted by Christopher Geehern on Feb 6, 2018 8:06:35 AM

Massachusetts employers began 2018 much the way they ended 2017 – with growing confidence in the economy and optimism about their own business prospects.

BCI.January.2018.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose half a point to 64.1 during January, setting another 17-year high. The BCI has gained 2.7 points during the past 12 months as employer confidence levels have remained comfortably within the optimistic range.

Growing enthusiasm about the Massachusetts economy and a brightening outlook on economic conditions six months from now fueled the January confidence increase. At the same time, the hiring outlook remained muted as low unemployment and demographic shifts continued to impede the ability of employers to find the workers they need.

The survey was taken prior to major declines in global financial markets during the past several days.

“Rising confidence is not surprising in a state with 3.5 percent unemployment and an economy that grew at a 3.3 percent annual rate during the fourth quarter,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“Economic output, job growth and spending all rose at a healthy clip in Massachusetts during the final three months of the year and economists expect modest growth to continue during the first half of 2018.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The Index has remained above 50 since October 2013.

Constituent Indicators  

The constituent indicators that make up the overall Business Confidence Index were mixed during January.

The most significant gain came in the Massachusetts Index assessing business conditions within the commonwealth, which rose 1.3 points to 68.9. The Massachusetts Index has gained 3.7 points in the past two months, 5.5 points year over year and now stands at its highest level since November 2000.

The U.S. Index of national business conditions also continued a yearlong rally by gaining 0.6 points to 64.8. January marked the 95th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, decreased a point to 61.7 while the Future Index, measuring expectations for six months out, surged 2.1 points to 66.6. The Current Index has risen 2.1 points and the Future Index 3.3 points during the past 12 months.

Operational Views

The Company Index, reflecting employer views of their own operations and prospects, rose slightly, gaining 0.2 points to 62.3. The Employment Index was essentially flat, leaving it 2.1 points below its level of January 2017.

Non-manufacturing companies (66.6) were more optimistic than manufacturers (62.3). Large employers (67.2) were more bullish than medium-sized (62.7) or small businesses (63.5).

“The strong Future Index readings signal that employers anticipate steady growth during the first two quarters of 2018. The only fly in ointment remains the prospect that labor shortages may constrict the ability of companies to grow and expand,” said Paul Bolger, President, Massachusetts Capital Resource Company and a BEA member.

Political Risks

AIM President and CEO Richard C. Lord, also BEA member, said 2018 brings with it significant risk for employers as progressive groups push ballot questions that could create a $1 billion paid family and medical leave program, impose a punitive tax on many small businesses and raise the state minimum wage to $15 per hour.

“The Massachusetts Supreme Judicial Court will today hear arguments in a challenge that I and four other business leaders filed to the constitutionality of the income surtax question. Meanwhile, the business community is seeking common ground on a compromise paid-leave proposal that will not harm the economy,” Lord said.

Topics: AIM Business Confidence Index, Massachusetts economy, Massachusetts employers

Video Blog: How Will Automation and Robotics Affect the Economy?

Posted by Christopher Geehern on Feb 5, 2018 8:30:00 AM

How will artificial intelligence, automation and robotics affect the Massachusetts economy? The Associated Industries of Massachusetts Economic Outlook Forum tackled that question on January 26. Expert analysts included, left to right, moderator Jeff Brown, Business Editor of WBZ radio in Boston; Peter Russo Director of Growth and Innovation at the Massachusetts Manufacturing Extension Parntership; Martha Sullivan, President and CEO of Sensata Technologies in Attleboro; and David Askey, Co-Founder and CEO of Ascend Robotics in Cambridge.

Topics: Technology, AIM Executive Forum, robotics

AIM President: Technology Key to Solving Worker Shortage

Posted by Christopher Geehern on Jan 26, 2018 1:14:00 PM

Robotics, artificial intelligence and automation hold the unique promise of resolving the shortage of skilled workers that threatens the economic future of Massachusetts, AIM President and Chief Executive Officer Richard C. Lord said this morning.

Lord.Speaking.jpgDelivering the fourth annual State of Massachusetts Business address before 300 senior business executives, Lord acknowledged that automation suffers from a grim image problem in the larger society where people fear that robots will take their jobs. But he said Massachusetts employers starved for qualified employees are using robots in collaboration with people to extend the reach of their work forces.

“In a state where employers created 70,000 jobs last year and unemployment stands at 3.6 percent, the structural shortage of skilled workers stands as the primary impediment to sustained economic growth,” Lord told the 2018 AIM Economic Outlook Forum.

“Massachusetts companies across industries ranging from software to manufacturing to hospitality have postponed expansions, declined to bid for contracts or outsourced work because they simply can’t find people with the training needed to compete in a complex world. The only way out of this economic dead end for Massachusetts is to rely upon productivity improvements fueled by intelligent technology to extend the reach of the talented people we employ.”

Lord highlighted the example of Barrett Distribution of Franklin, which is using robots to improve productivity and reduce the amount of time its 500 employees spend moving throughout large warehouses to provide orders for retailers and e-commerce customers. Established as a single warehouse in 1941, Barrett now operates more than 2.1 million square feet of state-of-the-art warehouse space across the country.

“The industry is changing very fast, the robots will get smaller, more adaptive, (and) a little bit cheaper, so I think you’ll see the adoption rate go up very high across the industry. And certainly for us, we’re going to be on the leading edge of this technology,” Scott Hothem, Senior Vice President of Customer Solutions at Barrett, said in a video shown the audience.

Lord said the good news is that Massachusetts is a global center of robotics, AI and automation. Driven by academic research institutions like MIT, Harvard, UMass and BU, Massachusetts occupies a unique position as the crucible of intelligent industries ranging from driverless vehicles to Patriot missiles to Roomba vacuum cleaners.

It’s also worth noting, according to Lord, that there is plenty of room for improvement on the productivity front. The United States posted an historically low annual labor productivity growth rate of 1.1 percent between the great Recession and 2016. The McKinsey Global Institute estimates that automation could raise productivity growth globally by 0.8 to 1.4 percent each year.

A panel of experts largely agreed with the idea that automation will enhance, rather than replace, most human labor.

David Askey, founder of Ascend Robotics in Cambridge, said the manufacturing companies that use his technology have realized productivity increases approaching 40 percent that have also raised the compensation and value of workers.

“Most of our calls come from customers who are not able to find enough skilled workers or want to expand,” Askey said.

Martha Sullivan, President and CEO of Sensata Technologies of Attleboro, said that while the technology for mass use of autonomous vehicles remains several years away, it is a technology that could change the entire business model of the auto industry from one that sells vehicles to consumers to one that helps companies manage fleets.

“Will you have private ownership anymore? Will you need private automobile insurance? … It becomes an asset- management question,” she said.

Lord said employers acknowledge the need to engage in debate about the hard issues raised by the technological revolution: Does automation ultimately create or cost jobs? Do Amazon and similarly disruptive companies ultimately help or harm the economy? And are technology driven productivity increases to blame for the slow rate of wage growth eight years into an economic recovery?

“But the ultimate truth is this – technology and innovation are here to stay; they do not regress, they do not go away and they do not waiver from the relentless pursuit of removing inefficiencies from the business economy.,” Lord said.

“If large numbers of workers are not going to walk through the doors of our companies to write code or make jet engine parts, employers will have to find ways to do more with less.”

Topics: Massachusetts economy, AIM Executive Forum

Tax Reform Repatriation Levy Right Around the Corner

Posted by Alan Osmolowski, CPA on Jan 22, 2018 8:30:00 AM

Editor's note - Alan Osmolowski, CPA, is a partner at BlumShapiro, the largest regional business advisory firm based in New England, with offices in Connecticut, Massachusetts and Rhode Island.

The Tax Cuts and Jobs Act (the Act) was signed into law by the President on December 22, 2017. The Act represents some of the most historic changes to US tax law in more than 30 years.

Finance.pen.small.jpgMost of the tax law changes take effect in 2018.

There are some changes, though, that have more immediate implications. The new one-time repatriation tax on accumulated foreign earnings is one of them. Corporations that have accumulated foreign-sourced income may find themselves owing the federal government (and in some cases, state governments) an additional tax payment as soon as April 15 of this year.

Under the new law, a US person (including corporations, S corporations, partnerships and individuals) owning at least 10 percent, directly or indirectly, of the stock in a foreign subsidiary is required to include in income their pro-rata share of the undistributed, non-previously-taxed post-1986 foreign earnings of the foreign subsidiary.  This provision of the Act is effective for the last taxable year that begins before January 1, 2018.

The operative wording of the Act relative to this provision in effect imposes the mandatory repatriation tax for a calendar year-end taxpayer as part of their 2017 tax compliance (and with respect to corporations, the recording of a tax provision on their 2017 financial statements).

The amount of deemed repatriation income is reduced by any aggregate foreign earnings and profits deficits. A partial deduction is also allowed against the deemed repatriation income such that a US corporation’s effective tax rate is 15.5 percent on their aggregate foreign cash positions and 8 percent on the balance.

The inclusion of foreign accumulated earnings is deemed to be additional “Subpart F income.”  Foreign tax credits may be able to be used to offset the tax. An election can be made such that the payment of the net tax liability can be spread over a period of eight years.

The one-time repatriation tax is owed on accumulated foreign “earnings and profits” (E&P) of a 10 percent or more owned foreign subsidiary going back to 1986. That is a long period of time for most companies to analyze. For a calendar year-end US corporation, the first installment of the tax is due April 15.  Many taxpayers are struggling with the daunting task of calculating their pro-rata share of accumulated foreign earnings and profits since 1986.

There are also many unanswered questions relative to how state and local tax (SALT) jurisdictions will tax the income the federal government is requiring to be included in income relative to the mandatory repatriation tax.

The starting point for state taxable income is typically federal taxable income; so the one-time deemed repatriation of Subpart F income raises some interesting and possibly problematic SALT questions, especially for those states that don’t follow all of the provisions of the Internal Revenue Code. In addition, should a state impose its tax on the deemed repatriated income, it would appear doubtful that many states would allow for the eight-year payment deferral provided by the federal law and thus require an immediate payment of the state income tax.

Some business people are calling the repatriation tax a “tax holiday” and others are calling it “confiscatory.”

The repatriation tax is just one topic that will be discussed by a panel of experts on February 5 as Associated Industries of Massachusetts and BlumShaprio offer a “Lunch and Learn” webinar on the new tax law.

Topics will include:

  • General discussion about tax reform in the US and the rest of the world
  • Changes to US corporate taxation
  • US International tax law changes
  • What does the new law mean for my business?
  • S vs C Corporation
  • SALT impact
  • Financial reporting requirements

There will also be a question and answer period following the presentation.

The webinar is free for AIM members and guests. Registration is below.

Register for the AIM/BlumShapiro Tax Reform Webinar

Competition Moderates Clean-Energy Costs for Ratepayers

Posted by Bob Rio on Jan 16, 2018 8:30:00 AM

Clean energy in Massachusetts is finally subject to the laws of economics. That’s good news for both businesses and residents throughout the commonwealth who pay some of the highest electric rates in nation.

Hydro.jpgThe current competitive bidding process being conducted by Massachusetts utilities for large scale hydropower, onshore and offshore wind, and solar will not lower the price of electricity – at least not in the next few years. But ratepayers will at least be assured their money is being spent wisely.

Governor Charlie Baker signed two energy bills in 2016 that swept away the sweetheart deals and overly generous subsidies that characterized the clean-energy business prior to that time. The bills required purchases of clean energy to be competitive and transparent. The results are already evident, even before the contracts are signed.

In April 2017, as part of the first requirement for the utilities to purchase clean energy (primarily large hydropower from Canada and onshore wind) a request for proposals was sent to developers.

Suppliers responded with nearly 50 proposals, far more that the total cumulative amount allowed in the legislation. Some names you might recognize – Hydroquebec, for instance, has been sending power to Massachusetts for decades. But others may not be as familiar – Emera, Nalcor, TDI, Nextera, and Avangrid – some partnering with utilities National Grid and Eversource - all vying to serve Massachusetts consumers.

The clean energy process even attracted a bid from New England-based Deepwater Wind, which submitted a small offshore wind proposal, even though the larger competitive solicitation for offshore wind was not due until this month, separate from the initial clean energy bidding process.

While prices haven’t been disclosed yet (the analysis is based on a complex evaluation of bids and is confidential until a winning bidder is selected following by a public process at the Department of Public Utilities process), the fact that so many developers “sharpened their pencil” is a good start.

Bids under the clean-energy program are scheduled to be awarded around January 25. Bids for the separate offshore wind program will be selected on April 23..

Competition will have a particularly dramatic effect on solar energy.

Although some small solar projects were bid as part of the clean energy proposals, the vast amount of solar installations are currently subsidized through a different program that has been around for several years. It has become not only expensive – $500 million dollars per year, but also overly generous as the cost of solar installations has dropped more than 50 percent due to lower market prices.

Most states went to a competitive framework years ago – and saw significantly lower prices, but Massachusetts program is just starting. Bids for new solar projects were due in December. Those bids will establish a baseline process for solar power for the next several years. Based on the experience of other states, the prices should drop by more than half.

And that’s not all. In both the offshore wind and solar programs, future projects must be lower than the current prices, all but guaranteeing that the state has bent the price curve for these installations.

It’s an ambitious move. And in the aftermath of the Cape Wind debacle, some Massachusetts ratepayers may find it hard to believe that clean energy and offshore wind farms could be competitively priced and developed cost-effectively.

But that is what is happening. And the diversity of projects was no surprise to AIM – early supporters of bringing competition to clean energy.

The debate about whether the commonwealth will pursue clean energy is over. So is the debate about the value of competition to Massachusetts electric customers.

Topics: Electricity, Energy, Solar Subsidies

AIM Weighs In On Key Employment-Law Issues

Posted by Brad MacDougall on Jan 12, 2018 12:48:37 PM

Associated Industries of Massachusetts weighed in yesterday on 73 bills pending before a key legislative committee considering employment-law issues ranging from independent contractors to the use of non-compete agreements.

State House 2015.jpgThe association delivered  a letter to members of the Joint Labor & Workforce Development Committee as the panel approaches a February 7 deadline to report out bills with either a positive or negative recommendation. AIM supports 29 bills now before the committee and opposes 44.

Among the measures that employers support are bills streamlining the complex definition of an independent contractor and compromise limitations on non-compete agreements that recognize the fact that employers often compensate workers for signing such agreements.

AIM opposes bills that would establish paid family and medical leave, increase the minimum wage, and impose vicarious liability for wage violations on any company that hires subcontractors. AIM also opposes legislation (S.1013) that would create civil liability and define workplace bullying.

“The February 7 deadline for Beacon Hill committees to report out bills under the Legislature’s Joint Rule 10 signals the start of a critical period for employers and the issues that affect them,” said John Regan, Executive Vice President of Government Affairs at AIM.

“There will be a flurry of activity between now and the end of the two-year legislative session on July 31. Employers need to pay close attention since important bills often move quickly during this period.”

The independent contractor issue revolves around an overly restrictive statute that leaves Massachusetts on the sidelines of one of the fastest developing sectors of the economy.

One out of every three American workers, from software engineers and researchers to graphic designers, freelance journalists and nannies, today works independently outside the bounds of traditional 9-to-5 employment. The trend includes the so-called sharing economy that provides apps allowing individuals to exchange goods and services ranging from rides to housecleaning.

But Massachusetts' share of that job growth is threatened by a state law that imposes a confusing and complex three-factor test to determine whether a worker is an employee or independent contractor.

On non-compete agreements, AIM has fought relentlessly for several years on behalf the vast majority of Massachusetts employers who wish to preserve the use of non-competes to protect intellectual property. The association supports a compromise that would limit non-competes to one year and give employees the opportunity to consult a lawyer when signing a non-compete, but not require companies that compensate employees at the time they sign non-competes to pay them again during the restricted period.

AIM also supports a group of measures intended to address discrimination and harassment in the workplace. One bill would allow employers to ask previous employers questions about an applicant’s work history (H.1046), while a second would encourage employers to engage in voluntary training regarding non-discrimination (H.1037/H.1047) and third would rewrite a highly confusing and problematic statute that makes adding disciplinary matters to a personnel record difficult (H.1049/S.1044).

The paid family and medical leave and minimum wage initiatives opposed by employers mirror similar measures headed to the statewide ballot in November. A third ballot question would create a constitutional amendment imposing a 4 percentage-point surtax on incomes of more than $1 million for thousands of subchapter-S and other pass-through business in Massachusetts.

AIM President and Chief Executive Officer Richard C. Lord and four other prominent business leaders are challenging the proposed tax amendment in court.

Please contact me at bmacdougall@aimnet.org for more information on any of these issues.

Topics: Independent Contractor Law, Massachusetts Legislature, Employment Law, Non-Compete Agreements

Employer Confidence Closes 2017 at 18-Year High

Posted by Christopher Geehern on Jan 9, 2018 8:51:27 AM

Surging optimism about the state and national economies left Massachusetts employers with their highest level of confidence in 18 years as 2017 drew to a close.

BCI.December.2017.jpgThe Associated Industries of Massachusetts Business Confidence Index (BCI) rose one point to 63.6 during December, its highest level since November 2000. The BCI gained 3.2 points during a year in which employer confidence levels remained comfortably within the optimistic range.

Every element of the overall index increased during 2017 except for the Employment Index, which dropped half a point. Analysts believe low unemployment and demographic shifts are impeding the ability of employers to find the workers they need.

“Massachusetts employers maintained a uniformly positive outlook throughout 2017 and passage of the federal tax bill only added to that optimism,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“At the same time, the 12-month decline in the Employment Index reminds us that the persistent shortage of skilled workers has reached an inflection point for the Massachusetts economy. Massachusetts companies have postponed expansions, declined to bid for contracts or outsourced work because they simply can’t find people.”

The AIM Index, based on a survey of Massachusetts employers, has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009.

The Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were mostly higher during December.

The Massachusetts Index, assessing business conditions within the commonwealth, surged 2.4 points to 67.6, leaving it 5.8 points better than a year earlier.

The U.S. Index of national business conditions continued a yearlong rally by gaining 2 points to 64.2. December marked the 94th consecutive month in which employers have been more optimistic about the Massachusetts economy than the national economy.

The Current Index, which assesses overall business conditions at the time of the survey, decreased 0.7 points to 62.7 while the Future Index, measuring expectations for six months out, rose 2.7 points to 64.5. The Current Index gained 3.6 points and the Future Index 2.8 points during 2017.

Operational Views

The Company Index, reflecting employer views of their own operations and prospects, declined 0.2 points to 62.1.

The Employment Index rose slightly to 56.7, but still ended the year 0.5 points below the 57.2 posted in December 2016.

Manufacturing companies (64.3) continued to be more optimistic than non-manufacturers (62.6). Another unusual result was that employers in western Massachusetts (64.6) posted higher confidence readings than those in the eastern portion of the commonwealth (62.7).

“Employer attitudes largely reflect a national economy that grew at its fastest pace in three years during the third quarter on the strength of business spending on equipment. The headline is that unemployment is down and the financial markets are up,” said Michael A. Tyler, CFA, Chief Investment Officer, Eastern Bank Wealth Management, and a BEA member.

AIM President and CEO Richard C. Lord, also BEA member, said employers received an early Christmas present from a federal tax bill that reduced corporate rates from 35 percent to 21 percent and reduced rates for pass-through entities such as subchapter S corporations as well.

“The tax bill produced short-term benefits, ranging from companies like Comcast and Citizens Financial providing bonuses to employees to the utility Eversource reducing electric rates in Massachusetts,” Lord said.

“At the same time, employers are cautious about the effect that other provisions – including limitations on the deduction for state and local taxes – will have on the overall Massachusetts economy.”

Topics: AIM Business Confidence Index, Massachusetts economy, Massachusetts employers

Tax Reform to Reduce Electric Rates

Posted by Bob Rio on Jan 3, 2018 6:22:15 PM

Federal tax reform may soon generate a $56 million windfall for Eversource electric ratepayers in Massachusetts.

Electriclinessmall.jpgEversource disclosed in a filing with the Department of Public Utilities today that the reduction in federal corporate tax rates from 35 percent to 21 percent will allow the company to reverse the rate increase approved for NSTAR customers in November and to reduce the amount of increase for customers of Western Massachusetts Electric Company.

NSTAR customers will now see a $35.4 million decrease in base rates instead of a $12.2 million increase. Western Massachusetts Electric customers will see their rate increase shrink from $24.8 million to $16.5 million.

Eversource indicated that it may seek additional rate reductions next January after calculating excess deferred taxes.

“Great news for Massachusetts employers struggling to manage the high cost of electricity,” said John Regan, Executive Vice President of Government Affairs for Associated Industries of Massachusetts.

“Tax reform created a tremendous opportunity to provide rate relief to customers and Eversource deserves credit for moving rapidly to realize that opportunity."

Attorney General Maura Healey filed a motion with the DPU on December 20 seeking larger rate reductions. Eversource says its agrees with the need to reduce rates, but calculates the numbers differently. Utility regulators will now determine the final figures to be implemented on February 1.

AIM urges the DPU to approve the rate reductions for Eversource and to review the rates of other utilities in the wake of the changes in federal tax law.

Topics: Massachusetts employers, Energy, Massachusetts Department of Public Utilities

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