Gov. Deval Patrick speaks with members of the National Association of Industrial and Office Properties’ Massachusetts chapter at the Boston Harbor Hotel last week.
After a trade group blasted Gov. Deval Patrick’s recent proposal calling for tax increases on businesses, some expected the meeting between the two sides to be a raucous event. But the fireworks failed to materialize.
“We’re a friendly group,” said David Begelfer, chief executive officer of the Massachusetts chapter of the National Association of Industrial and Office Properties, following the governor’s 40-minute talk last week at the Boston Harbor Hotel. “Most people in the commonwealth want to give the governor a chance.”
Begelfer’s comments were in sharp contrast to remarks he made to Banker & Tradesman in February in the wake of the governor’s proposal to increase corporate taxes. At the time, he said, “This will hit businesses that have already been paying a disproportionate share of real estate taxes Â… it would unfairly push the real estate tax burden onto thousands of businesses and renege on a compromise.”
But following the governor’s speech, Begelfer backed away from those hardball comments and said, “There are differences, but we prefer to work them through with the administration. To hit the governor hard is inappropriate.”
Patrick spoke to a packed crowd filled with NAIOP members at the forum sponsored by the association, whose Bay State chapter is based in Needham. In February, his administration proposed the Municipal Partnership Act to help fill a $1.3 billion budget shortfall. Among the most contentious issues in the proposed legislation are increased rates for commercial real estate.
During his speech, the governor steered clear of the controversial commercial-tax issue and focused on other legislative initiatives including: promises of more funds for the Soft Second mortgage program and the Affordable Housing Trust; improvements to roads and bridges; a proposal to double the expenditures for extended day programs and to make all-day kindergarten available to 15,000 more children; a proposed $3.7 billion education budget, the largest in the state’s history; and funding health care reform.
At no point did Patrick say how much those initiatives would cost or how he would pay for most of them. The kinder, gentler NAIOP crowd did not question him about those details. Here are the questions and the governor’s answers (in some cases, partial answers) from the session:
Q: What do you say to a 26-year-old who just received her master’s degree in engineering at a local university and is considering job offers in Raleigh (North Carolina), Austin (Texas) and Boston?
A: I say Massachusetts is one of the most exciting places to be if you are an engineer because we are a leader in innovation and in thought and we are going to market that worldwide.
Q: Despite the great strides made on health insurance for the uninsured, many businesses are discouraged as we watch our premiums rise – some doubling in the past five years. What hope is there for containing these costs?
A: You are right that most of the emphasis in health care reform has been on access for the uninsured. The law does require some emphasis on the cost side, which is important for everyone. Forty percent of the state budget goes to support health-related costs. We are waiting for a cost-reduction panel to complete their work but I have a couple of strategies. Greater technology is needed to manage patient information Â… we should standardize the forms for reimbursement. There are smarter bulk-purchasing strategies for prescription drugs that can be made broadly available.
Q: The state budget is tight but we also have been under-investing in transportation and higher education. How should we deal with this important infrastructure?
A: Investment in transportation and higher [education] are best made through bonds. In May, we will offer a proposal for bonding infrastructure in higher ed. Transportation is more complicated. It’s a lot of money. We expect it to require multiple billions of dollars. We agree that we have to make those kinds of investments. I have an idea on how we will pay for that bond bill but it’s not complete yet and I won’t talk about it now.
Q: What can you, and we, do to reduce the senseless killings in Dorchester?
A: I don’t have a magic wand; if I did, I would certainly wave it in this case. It requires more than one strategy. It’s after-school and enrichment programs for young people so they have alternatives to gangs. We have some additional funding proposals in our budget for summer-job opportunities. It’s smaller class size so that young people get attention from adults. I also think that we have to start acting like that unfamiliar kid on our block is our kid.
Q: What specific economic benefits, grants, loans and other incentives are available to companies in alternative energy that are considering expanding in Massachusetts versus other states? Describe the process and the timeline.
A: We have [research-and-development] and investment tax credits that are available to a variety of innovation-based businesses and to alternative energy. One of the issues around renewable energy is how simple or complicated it is to sell it back. There are regulatory changes required and you will see those changes proposed very soon Â… how do we compare to other states? We are in the top third of other states in terms of our activities and the top 15 in terms of companies who are based here who are showing leadership in alternative energy.
Q: State aid for cities and towns is based on property values. In Gloucester, property values are high with oceanfront properties but the average income is very low and the city is in a revenue crisis. Do you plan to change the state-aid formula?
A:We need to change the mix of options available to cities and towns, which is why we have proposed the Municipal Partnership Act. There is over-reliance on the residential property tax and it’s based on a shift that we have seen over many years away from the income tax to the property tax. It’s squeezing lots of homeowners, especially those on fixed incomes. We have two proposals to try to relieve some of these pressures. One is direct property tax relief, and that is to take the senior-circuit breaker and make it available to homeowners regardless of age. Our proposal would offer up to $900 in credit for qualified households for up to 100,000 new households. We also proposed to take underperforming local pension boards and roll their investment into the state where the returns have been more robust. On the revenue side, communities should be allowed to impose a modest meals or lodging tax at 1 [percent] or 2 percent. Let communities decide. Also, the telecom exemption is a century-old statute that exempts telephone companies from property taxes … it’s time to end that.
Q: I have met resistance from town officials in trying to permit projects under the new Chapter 40R because of skepticism about state funding. What can be done to reassure them?
A: I will take you by the hand and introduce you to our ombudsman and he will help you solve this problem.
