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Health Care, Energy, Non-Competes on Table in Final Days for Legislature

Posted by John Regan on Jul 30, 2018 9:12:20 AM

Beacon Hill lawmakers will complete their version of final-exam week Tuesday at midnight as the Legislature races to complete bills before the end of formal meetings for 2017-2018 Beacon Hill session.

State House 2015The conclusion of formal sessions on July 31 of even-numbered years generally means the end of the line for controversial bills. Lawmakers will meet for the remainder of 2018 in informal sessions, when a single lawmaker may stop any measure with an objection.

The most important issues to employers have already been resolved in advance of this year’s end-of-session rush. The Massachusetts Supreme Judicial Court last month invalidated a potential income-tax surcharge constitutional amendment, while negotiations over three other ballot questions produced agreement on a compromise paid family and medical leave law, as well as a minimum-wage increase.

Three key employer issues remain on the table during the waning hours of debate:

  • Health care reform – The House and Senate passed different versions of health reform and a conference committee is working to hammer out a consensus bill. AIM remains concerned about both bills because they include expensive assessment. Neither bill reforms the MassHealth program for low income residents, where employers are paying a $200 million assessment to close a funding gap.
  • Energy – Measures passed by both the House and Senate could significantly increase the percentage of clean-source electricity used by Massachusetts consumers. AIM believes the bills could have the perverse effect of squeezing out clean hydro power and interrupting the successful roll-out of the 2016 energy law.
  • Non-compete agreements – The Senate, as part of an economic development bill, largely adopted the same modest restrictions on non-competes that AIM and other business groups supported two years ago as part of a compromise with House Speaker Robert DeLeo. But deep-pocketed venture capitalists continue to press for an outright ban and prospects for passage remain uncertain.

Employers also received some good news last week when Governor Charlie Baker signed the budget for the fiscal year that began July 1. The budget authorizes the administration to develop a hardship waiver for employers liable for the MassHealth surtax. Details remain to be developed.

The budget also provided full funding for the Massachusetts Manufacturing Extension Partnership.

Please contact me at 617.262.1180, or jregan@aimnet.org if you need more information on any of these issues. 

Topics: Massachusetts Legislature, Controlling Health Care Costs, Non-Compete Agreements, Energy

Beacon Hill: Don't Mess With Success on Energy

Posted by Bob Rio on Jul 27, 2018 7:45:00 AM

Massachusetts lawmakers, led by the state House of Representatives, got energy policy right two years ago.

ElectriclinessmallWe now have proof that the landmark 2016 Beacon Hill energy bill requiring competitive procurement of nearly 1,200 megawatts of clean energy is helping the environment without bankrupting the companies and homeowners who pay electric bills.

The New England Clean Energy Connect (NECEC), which won a competitive bid to move zero- carbon hydro power from Hydroquebec over transmission lines built by Avangrid through Maine, is seeking state approval for a 20-year contract with a levelized price (2017 dollars) of 5.9 cents per kilowatt/hour (kWh). In real dollars the price begins at approximately 6.4 cents per kWh in 2023 to slightly more than 10 cents per kWh in 2043.

The average cost is about 8.1 cents per kWh 

That’s surprisingly close to today’s wholesale prices.

But here’s the catch – none of these encouraging developments would have taken place if the Legislature had increased the so-called Renewable Portfolio Standard (RPS), a step that ironically is being debated now as part of a 2018 energy bill. AIM believes increasing the RPS will impede rather than further the goal to reduce greenhouse gas emissions 80 percent from all sectors by 2050.

The reason is that the RPS does not include large hydro power projects such as NECEC, even though hydro power emits no carbon. RPS-eligible sources consist primarily of onshore and offshore wind and solar. (Offshore wind contracts should be filed shortly with the Massachusetts Department of Public Utilities).

As the RPS mandate increases (along with other energy mandates) hydro power will at some point become ineligible to receive credit in Massachusetts for its clean-energy attributes. Based upon AIM’s analysis of the 2018 energy proposals, hydro power could be out of the energy mix before the end of the proposed 20-year Avangrid contract term and well before the RPS approaches 100 percent.    

The result is that Massachusetts business and residential consumers could end up paying for hydro power they can’t use to comply with clean-energy laws. 

Instead of taking the disruptive step of increasing the RPS, the Legislature should instead enjoy the success of their efforts to create a dynamic energy market in Massachusetts:

  • Massachusetts is moving forward with plans to develop more than 2,800 MW of zero-carbon energy, representing 40 percent of the commonwealth’s electric load at full build.   
  • A new solar program will double the amount of current solar capacity.  
  • There is continued innovation in Massachusetts’ nation-leading energy efficiency program.  
  • New energy storage pilots and rebate programs are rolling out. 
  • New electric and other alternative vehicle programs will tackle the largest source of greenhouse gas emissions – transportation.  

AIM and its member employers are committed to encouraging clean energy without increasing the RPS.

We urge the administration and the Legislature’s energy conference committee to discuss additional competitive solicitations of clean energy, including offshore wind and hydro power.  Those discussions should include a review the procurement process to ensure it has led to the lowest possible prices for Massachusetts consumers while creating opportunities to grow a new clean energy industry here.

 

Topics: Electricity, Energy, Hydro Power

History and Hope in the Massachusetts Senate

Posted by Rick Lord on Jul 26, 2018 8:00:00 AM

SP.SpilkaJPGThe passing of the Massachusetts Senate presidency today from Harriett Chandler to Karen Spilka represents a transition from one woman who has gracefully led the chamber through a period of turbulence to another who offers significant hope for an inclusive approach to the employer community.

Senator Chandler, a Worcester Democrat, assumed the presidency in December after former President Stanley Rosenberg of Amherst resigned amid a scandal. She steered the Senate through the ensuing months while developing consensus on important issues such as the “grand bargain” that headed off a dangerous ballot question on paid leave.

Senator Chandler deserves tremendous credit for conducting her work with the decorum and decency so often missing in American politics these days. She and Senator Spilka jointly announced the transition in April after the Ashland Democrat secured the support needed to guarantee her election as president.

Senator Spilka, who has chaired the Senate Ways and Means Committee for more than three years, has already reached out to Associated Industries of Massachusetts on key issues ranging from health-care reform to the sensible use of non-complete agreements. We look forward to additional issue conversations as the Legislature moves toward the end of its two-year formal session next Tuesday.

AIM stands ready to work with the new Senate president, House Speaker Robert DeLeo and Governor Charlie Baker to prioritize policy matters that can improve the economic climate of the Commonwealth and, thereby, the lives of the residents of our state.

 

Topics: Massachusetts Legislature, Massachusetts senate, Karen Spilka

The Unintended Consequences of Energy Legislation

Posted by John Regan on Jul 16, 2018 11:53:29 AM

Listen as AIM Senior Vice President Robert Rio talks to the CommonWealth Codcast about  why focusing only on renewable power makes it harder for Massachusetts to reach its clean energy goals. 

Topics: Massachusetts Legislature, Energy

Employer Confidence Weakens in June

Posted by Christopher Geehern on Jul 3, 2018 9:21:05 AM

Confidence among Massachusetts employers weakened considerably during June as tariffs, rising raw-material costs and approval of paid family and medical leave in the Bay State raised concerns about business growth.

BCI.June.2018The Associated Industries of Massachusetts Business Confidence Index (BCI) dropped 5.3 points to 61.3 last month, its lowest level since August 2017. Confidence remains well within the optimistic range, but the June decline left the BCI slightly below its level of a year ago.

Though analysts say the volatility in business confidence during May and June may reflect some statistical anomalies, the comments provided by employers on the monthly AIM survey suggest that companies are becoming increasingly concerned about a perfect storm of issues on the federal and state levels.

“EMAC (employer MassHealth assessment) and paid sick time are going to put me out of business if something doesn’t change quickly,” wrote one employer.

Another wrote: “A trade war with China is going to cost jobs, not add them.”

“It is certainly significant that the AIM Business Confidence Index is lower than it was in June 2017. It is also significant that many of the individual indicators that make up the overall index - ranging from employer hiring plans to their views of the Massachusetts economy – are also lower than they were a year ago,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design. “It will be interesting to see how confidence changes during the summer as Massachusetts continues to operate at virtually full capacity.”

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 all lost ground during June.

The Massachusetts Index assessing business conditions within the commonwealth fell 7.2 points to 62.8, leaving it 1.4 points lower than in June 2017.

The U.S. Index ended the month at 60.0, down 9.3 points for the month but 2.6 points better than a year ago.
June marked the 100th 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, declined 2.6 points to 63.5. The Future Index, measuring expectations for six months out, fell 7.5 points to 59.1. The Current Index gained 1.6 points during the year while the Future Index lost 2.6 points.

Employer views of their own companies also weakened.

The Company Index declined 3.3 points to 61.2, down 1.2 points for 12 months. The Employment Index ended the month at 55.0, a 3.3-point decrease for the month and 3.1 points lower than a year ago. The Sales Index lost 2.9 points for the month and 0.2 points for the year.

Manufacturing companies (62.5) were slightly more optimistic than non-manufacturers (60.2). Companies in the eastern part of Massachusetts (63.3) were more bullish than those in the west (58.7).

“It’s interesting to note that medium and small companies remain significantly more optimistic than larger companies, reversing the typical pattern,” said Edward H. Pendergast, Managing Director, Dunn Rush & Co. “Entrepreneurial companies continue to drive growth here in Massachusetts.”

The BCI decrease came a month after the Mass Insight index of consumer confidence in Massachusetts suffered its biggest quarterly decline in years, from 134 in February to 121 in May. The index remined in optimistic territory, but fell below a comparable index for national consumer confidence for the first time since 2014.

Mixed Signals

AIM President and CEO Richard C. Lord, also BEA member, said employers are feeling threats from all directions.

“Member employers are deeply concerned about a potential trade war with China and with key US trading partners such as Canada, Mexico and the European Union,” Lord said.

“At the same time, the Legislature last week passed a ‘grand bargain’ that will create a family- and medical-leave requirement and increase the state minimum wage from $11 per hour to $15 per hour. Those requirements, on top of the MassHealth assessment and other elements, continue to challenge employers.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

'Grand Bargain' Reached on Paid Leave, Minimum Wage, Sales Tax

Posted by John Regan on Jun 20, 2018 11:18:45 AM

The Massachusetts Legislature will today consider a sweeping compromise between the business community and progressive groups on the issues of paid family and medical leave, minimum wage and a reduction of the state sales tax. 

StateHouse-resized-600The so-called “grand bargain” follows months of negotiations among employers, labor unions, community groups and legislators seeking to eliminate three potential November ballot questions – one asking voters to approve paid leave, a second to raise the minimum wage to $15 per hour and a third to reduce the sales tax from 6.25 percent to 5 percent.

Debate on the compromise comes two days after the Massachusetts Supreme Judicial Court disallowed a proposed constitutional amendment that would have imposed a surtax on incomes of more than $1 million and earmarked the money for transportation and education.

“AIM has worked diligently under difficult circumstances to get the best deal possible for Massachusetts employers on all three issues,” said Richard C. Lord, President and Chief Executive Officer of AIM.  “We commend the representatives of the Raise Up Coalition, other business groups, and the members of the General Court for working long and hard to reach an agreement.”

“While everyone gives something during a negotiation, we are satisfied and believe that our member employers are better off with a legislative compromise than with voter approval of the language of the ballot questions as drafted.” 

The compromise will phase in mandated paid family and medical leave over three years for all Massachusetts employers. AIM and other business groups negotiated reductions in the duration of family leave from 16 weeks in the proposed ballot question to 12 weeks, and of personal medical leave from 26 weeks to 20 weeks.

The cost of the program may be split between employers and workers, though the sharing arrangements are different based upon the type of leave and the size of a company.

More importantly, the compromise includes an opt-out provision for employers with programs that offer benefits greater than or equal to what an employee would receive in the state program.

Workers on paid leave will earn 80 percent of their wages up to 50 percent of the state average weekly wage, then 50 percent of wages above that amount, up to an $850 cap.

The compromise envisions that the Retailers Association of Massachusetts will drop its proposed ballot question on reducing the sales tax. In return, the compromise will phase out the requirement that retail workers earn time-and-a half for working on Sundays; create a permanent, two-day sales tax holiday; and will not include an automatic indexing provision of the minimum wage, currently $11 per hour and increasing to $15 per hour over five years.

The negotiations were carried out against the backdrop of polls indicating overwhelming support for all three ballot questions, not surprising given that the proposals appeared to offer something for nothing. Recent polls put support for the paid family and medical leave question at 82 percent and support for a $15 minimum wage at 78 percent.

Experts believe that a campaign to defeat questions with those sorts of poll numbers could cost $10 million per initiative. The ballot process is one-sided, winner-take-all. Coming to a legislative compromise avoids that by allowing a broader group of people to have input into key decisions to create policies that work for everyone.

AIM’s objectives for the negotiations were clear:

  • Encourage a legislative compromise that is balanced and fair, and that protects a strong Massachusetts economy.
  • Create programs that are accountable, have strong controls, and allow employers the flexibility to offer benefits that will attract and retain their employees.

Topics: Minimum Wage, Mandated Paid Leave, tax

Court Disallows Millionaire's Tax

Posted by Christopher Geehern on Jun 18, 2018 10:04:01 AM

The Massachusetts Supreme Judicial Court today disallowed a proposed constitutional amendment that would have imposed a surtax on incomes of more than $1 million and earmarked the money for transportation and education.

ScalesofJusticeVerySmallThe court, ruling in a case brought by AIM President Rick Lord and four other business leaders, decided that the initiative violated the state constitution by posing two unrelated questions to voters – whether they favored the surtax and whether they favored the required appropriation to transportation and education - in the same referendum.

The amendment would have imposed a new graduated income tax of 9.1 percent on all incomes more than $1 million. AIM believed the amendment would have had a devastating effect on the Massachusetts economy by increasing taxes for some 17,000 “pass-through” businesses that pay income tax at the individual rate.

“We are gratified that the Supreme Judicial Court agreed with the business community that the proposed question improperly combined a graduated income tax that has been rejected multiple times with spending requirements meant to appeal to voters,” Lord said.

“The lawsuit was not about public policy, but about preserving the integrity of the initiative petition process. The court did just that.”

The five plaintiffs lead organizations that represent the full breadth of the Massachusetts economy and are united in their commitment to ensuring that the commonwealth continues to foster conditions that support job development and economic growth. They 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); Mr. Lord; Eileen McAnneny, President of the Massachusetts Taxpayers Foundation (MTF); and, Daniel O’Connell, President and Chief Executive Officer of the Massachusetts Competitive Partnership (MACP). 

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

The Supreme Judicial Court heard oral arguments in the case on February 5.

"We conclude that the initiative petition should not have been certified by the Attorney General as 'in proper form for
submission to the people,' because, contrary to the certification, the petition does not contain only subjects
'which are related or which are mutually dependent,' pursuant to art. 48, The Initiative, II, § 3, of the Amendments to the Massachusetts Constitution, as amended by art. 74 of the Amendments," the court wrote.

"The matter is remanded to the county court, where a judgment shall enter declaring that the Attorney General's certification of Initiative Petition 15-17 is not in compliance with the related subjects requirement of art. 48 and
the petition is not suitable to be placed on the ballot in the 2018 Statewide election."

The court found no common purpose in the taxation and spending elements of the proposed amendment.

"...(W)e are unable to discern a common purpose or unified public policy that the voters fairly could vote up or down as a whole. The two subjects of the earmarked funding themselves are not related beyond the broadest conceptual level of public good. In addition, they are entirely separate from the subject of a stepped rather than a flat-rate
income tax, which, by itself, has been the subject of five prior initiative petitions. Because a reasonable voter could not fairly accept or reject the petition as a unified statement of public policy, Initiative Petition 15-17 does not meet the relatedness requirement..."

The court decision may expedite ongoing negotiations among the business community and progressive groups to compromise on three other potential fall ballot questions – one establishing paid family and medical leave, a second increasing the minimum wage to $15 per hour and a third reducing the state sales tax. The chances of achieving a so-called “grand bargain” under which the Legislature would pass consensus bills on the three issues are significantly greater with the graduated tax now off the ballot.

Lord said the tax initiative was dangerous because it would have enshrined tax rates in the state constitution.

“Amending the constitution to achieve taxing and spending by popular vote is just a terrible idea, and could undo much of the good work that Massachusetts has done in terms of creating a successful economic climate,” he said. 

Massachusetts voters have previously rejected five proposals to change the Constitution to allow for a graduated state income tax: in 1962, 1968, 1972, 1976, and 1994.

Topics: Richard Lord, Massachusetts Supreme Judicial Court, Income Surtax

Why We're Negotiating over Ballot Questions

Posted by Rick Lord on Jun 12, 2018 3:21:21 PM

Associated Industries of Massachusetts has been negotiating for more than six months to reach reasonable compromises on three potential ballot questions that collectively could wreak havoc on the Massachusetts economy.

Lord.SpeakingI write today to report on where we stand in those negotiations and how the outcome may affect your company and the 4,000 other employers who make up the largest employer association in the commonwealth.

The proposed ballot questions put forward by a coalition of unions and progressive groups would ask voters in November to:

  • mandate paid family and medical leave for Massachusetts employees;
  • increase the state minimum wage to $15 per hour; and
  • reduce the sales tax from 6.25 percent to 5 percent.

A fourth question, a constitutional amendment that would impose a 4 percentage-point surtax on incomes of more than $1 million, has been challenged by myself and four other prominent business leaders in the courts. 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.

We engaged in these negotiations for several important reasons.

First, the AIM Board of Directors and the larger membership of the association believed it was in the best interests of employers to pursue a negotiated settlement that might moderate the radical nature of the three initiatives.

Second, House Speaker Robert DeLeo and Senate President Harriett Chandler asked AIM, other business groups and sponsors of the three initiatives in early April to expand the discussions and work toward a “grand bargain” that would allow the Legislature to resolve all the issues before they reached the ballot. AIM agrees with the legislative leaders that initiative petitions represent an inefficient method of addressing public policy decisions that should be left to elected lawmakers.

There is, finally, the sobering reality that the questions enjoy overwhelming support in early voter polls, not surprising given proposals that appear to offer something for nothing. Recent polls put support for the paid family and medical leave question at 82 percent and support for a $15 minimum wage at 78 percent.

Experts believe that a campaign to defeat questions with those sorts of poll numbers could cost $10 million per initiative. The ballot process is one-sided, winner-take-all. Coming to a legislative compromise avoids that by allowing a broader group of people to have input into key decisions to create policies that work for everyone.

Our objectives for the negotiations have been clear:

  • Encourage a legislative compromise that is balanced and fair, and that protects a strong Massachusetts economy.
  • Adopt a compromise that protects jobs by keeping Massachusetts a competitive place to do business for employers.
  • Create programs that are accountable, have strong controls, and allow employers the flexibility to offer benefits that will attract and retain their employees.

Any compromise on the three issues will have to be wrapped up before ballots go to print in early July. And to make matters even more confusing, conclusion of a “grand bargain” is inextricably tied to an imminent decision by the Massachusetts Supreme Judicial Court on the graduated income tax proposal.

AIM has said virtually nothing publicly about the ongoing negotiations because participants agreed at the outset to maintain the confidentiality of the discussions. The idea was that it would be harder to reach common ground if everyone litigated the issues in the news media. We have honored our confidentiality promise, and, even now, cannot disclose all the details of the negotiations until a deal is in place.

Here is what we can tell you.

Negotiations on the paid family and medical leave question began in November and significant progress has been made toward compromise. The talks have been intense but respectful on a complex and multi-faceted proposal that could add more than $1 billion in benefit costs to employers and workers if passed in November.

Challenging issues remain and anyone involved in negotiations knows that the final compromises are always the most difficult. But it’s fair to say that we are confident about reaching an agreement on a paid leave plan that will be far less economically punitive than the one set out in the ballot question.

That question would allow covered workers to take up to 16 weeks of family leave or 26 weeks of medical leave. Workers could take family leave to care for a child after the child’s birth, adoption, or placement in foster care; to care for a seriously ill family member; or to address needs arising from a family member’s active duty military service.

The prospects for agreement on minimum wage and the sale-tax decrease are more uncertain.

Raise Up Massachusetts, the coalition behind the minimum wage, paid leave and the income surtax, sent a letter last week to DeLeo and Chandler indicating that the talks had reached a “standstill” over proposals from the Retailers Association of Massachusetts to eliminate time-and-a-half for Sunday retail work and creation of a minimum wage for teen-aged workers.

Progressive groups have since stepped up their public campaign with a massive lobbying effort on Beacon Hill and a separate protest for the $15 per hour minimum wage that tied up traffic for hours on Monday in Boston’s financial district.

Jon Hurst, President of the retailer’s organization that is sponsoring the proposal to reduce the sales tax, said last week that business groups remain committed to finding a solution on all issues.

“Although our ballot proposal has the support of almost 70 percent of voters in a recent public poll, we remain committed to working with legislators, other employer organizations, and other negotiators to see if a legislative solution can be reached,” Hurst said.

AIM members need to understand that we will be satisfied but far from happy if we reach a grand bargain. None of the potential agreements on paid leave, minimum wage or sales tax will be the ones employers would have designed. We may be able to improve some potentially catastrophic ballot initiatives, but employers will still ultimately face the unsavory trifecta of mandated paid leave, an accelerating minimum wage and possibly an income tax surcharge.

The long-term lesson may be a fundamental change in the way employers approach ballot questions. Stay tuned.

Please contact John Regan, Executive Vice President, Government Affairs, at jregan@aimnet.org for updates on these issues.

Topics: Minimum Wage, Massachusetts Legislature, Mandated Paid Leave

Renewable-Energy Mandate Endangers Hydro Deal

Posted by Bob Rio on Jun 8, 2018 8:23:48 AM

Proposed legislation to increase the amount of renewable energy that electricity suppliers must purchase may jeopardize a recently announced project to bring more than 1,000 megawatts of clean electricity to Massachusetts from Hydro-Quebec.

HydroMore significantly, it would remove hydro power as a long-term potential source of clean energy for Massachusetts.

The recently announced hydro project, to be developed by the power company Avangrid, will begin moving hydro power to the commonwealth over a transmission line through western Maine by 2022. The development would curb greenhouse- gas emissions by substituting hydro power for electricity from fossil-fuel plants.

The Avangrid proposal has been championed by the Baker Administration and supported by AIM.

Final contracts are expected to be signed within the next several days. The project will then be filed with the Massachusetts Department of Public Utilities (DPU) to determine whether it is cost-effective for ratepayers.

But An Act to Increase Renewable Energy and Reduce High-cost Peak Hours (H.1747) and similar bills now being debated on Beacon Hill threaten approval of the Avangrid project because they focus only on renewable energy and penalize clean-energy sources like hydro power.

H.1747 was reported favorably by the House Committee on Telecommunication, Utilities and Energy Committee (TUE) last week.

H.1747 increases what is known as the renewable portfolio standard (RPS) – the amount renewable energy (primarily wind and solar) that electricity suppliers need to purchase to serve their electric load. The RPS for 2018 is 13 percent of a suppliers’ total electric load, increasing 1 percent per year.

H.1747 would increase that rate marginally for the next few years, then to 2 percent per year beginning in 2020 until it reaches 100 percent. Other proposals would increase it even faster.

Renewable Portfolio Standard Fact Sheet

Here’s the problem. Hydro power is not eligible for inclusion in the RPS under Massachusetts law. As the RPS mandate increases (along with other energy mandates) hydro power will at some point become ineligible to be sold in Massachusetts. Based upon AIM’s analysis of the small increases proposed in H.1747, hydro power could be out of the energy mix before the end of the proposed 20-year Avangrid contract term and well before the RPS approaches 100 percent.    

The result is that Massachusetts business and residential consumers will end up paying for hydro power they can’t use.  That conundrum could significantly impact the cost-effectiveness determination of the proposed hydro power contract.   

The bottom line is that any bill that raises the RPS will eliminate the possibility of the legislature adding more hydro power to our energy supply. That’s a shame because the amount of power Massachusetts needs to meet its clean-energy goals is immense. Shutting out hydro will add decades to the time frame needed to achieve those goals.

Why does H.1747 and similar legislation put all our energy needs in one basket - essentially offshore wind – when at least part of the solution is already built?

We cannot believe that it is the goal of the Legislature to close the door on any long-term, cost-effective contracts for hydro power beyond the current procurement while disrupting the current procurement from reaching its full potential. That is the net effect of raising the RPS.

We urge the House Ways and Means Committee to turn thumbs-down on this bill. It will not help us achieve our carbon goals.

Letter Opposing An Act to Increase Renewable Energy

Connect with Bob Rio on Twitter, @robertrioaim, or at rrio@aimnet.org

Topics: Electricity, Environment, Energy

Employer Confidence Surges during May

Posted by Christopher Geehern on Jun 5, 2018 9:28:26 AM

Business confidence surged during May to its highest level since the summer of 2000, driven by improving employer outlooks about the state and national economies.

BCI.May.2018The Associated Industries of Massachusetts Business Confidence Index (BCI) rose 2.4 points to 66.6 last month after increasing modestly during April. The BCI has risen in five of the last six months and now stands 5.8 points higher than its level of a year ago.

Confidence remains well within the optimistic range. The only whiff of concern came in the index that measures hiring, which dropped 1.5 points for the month and 0.2 points during the year.

Economists believe the weakness in the AIM Employment Index reflects the persistent shortage of workers in Massachusetts that has forced some employers to postpone expansions or to decline new business opportunities.

Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design, cautioned that major month-to-month movements in the Index like those in May sometimes reflect statistical or sampling anomalies. He noted, however, that the numbers are consistent with a general sense that the US and state economies are picking up steam in the second quarter after a slow start to 2018.

“There are signs GDP growth gathered momentum early in the second quarter, with solid consumer spending, business investment on equipment and industrial production,” Torto said.

The nation’s economy grew at a 2.2 percent rate during the first quarter. Hiring across the US remains strong, with the government reporting on Friday that employers added 223,000 jobs during May.

“And the Massachusetts economy continues to operate at virtually full capacity, creating significant constraints on the availability of labor,” said Torto.

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 largely higher in May.
The Massachusetts Index assessing business conditions within the commonwealth surged 5.9 points to 70.0, leaving it 7.9 points higher than in May 2017.

The U.S. Index ended the month at 69.3, up 5.4 points for the month and 14.4 points for the year.
May marked the 99th 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, gained 1.5 points to 66.6. The Future Index, measuring expectations for six months out, increased 3.3 points to the same 66.6 level. The Current Index has risen 6.2 points and the Future Index 5.3 points since May 2017.

Employer views of their own companies were mixed.

The Company Index increased slightly to 64.5, up 2.1 points for 12 months. The Employment Index ended the month at 58.3, a 1.5-point decrease for the month and 0.2 points lower than a year ago. The Sales Index rose 1.7 points for the month and 3.3 points for the year.

Manufacturing companies (66.8) and non-manufacturers (66.3) were equally optimistic about the economy. Companies in the eastern part of Massachusetts (67.9) were more bullish than those in the west (64.6).

“Massachusetts employers remain confident, but economic growth in the commonwealth is increasingly bumping up against the structural shortage of skilled workers,” said Alan Clayton-Matthews, a BEA member and professor in the School of Public Policy & Urban Affairs, Northeastern University.

Clayton-Matthews told MassBenchmarks earlier this year: “Retiring baby boomers will continue to dampen labor force growth this year and throughout the next decade unless the commonwealth is able to attract young workers from across the country and the world.”

The BCI increase came as the Mass Insight index of consumer confidence in Massachusetts suffered its biggest quarterly decline in years, from 134 in February to 121 in May. The index remined in optimistic territory, but fell below a comparable index for national consumer confidence for the first time since 2014.

Mixed Signals

AIM President and CEO Richard C. Lord, also BEA member, said the increase in business confidence underscores the underlying strength of the economy at a time when employers are receiving mixed signals from government.

“On the one hand, employers are seeing benefits from federal tax reform. On the other hand, they are struggling to process the new Massachusetts health-care surcharge and looking ahead warily to the possibility that Massachusetts voters may approve a graduated income tax that could harm small businesses,” Lord said.

“AIM and the employer community are seeking to negotiate reasonable compromises on issues such as paid family/medical leave and a $15 per hour minimum wage, compromises that would allow employers to continue creating jobs for Massachusetts residents.”

Topics: Skills Gap, AIM Business Confidence Index, Massachusetts economy

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