Massachusetts Governor Healey offers sympathetic ear in business address

By Chris Lisinski

NEWTON, MASS. – Three weeks into her tenure in the corner office, Gov. Maura Healey told business leaders her administration is ready to “do more” to address their pressing concerns and targeted workforce strain, tax relief and health care investment as broad areas of focus.

Addressing hundreds of business leaders, Healey said she is keyed into their concerns about competitiveness, tax burdens, a shortage of employees, runaway housing prices and unreliable transportation services. But her speech included few specifics about what her nascent administration will do to tackle those issues.

The new governor said her address at the Associated Industries of Massachusetts event came at “a pivotal time for our state, particularly with all that you are confronting day in and day out.”

“We are the greatest state in this country. I also know we have to be honest about the realities, and the fact is, Massachusetts is expensive — high housing costs, high child care costs, high electricity costs, unreliable transportation. Remote work flexibilities, as wonderful as they have been, also have changed dynamics within a workforce,” Healey said, adding that due to a confluence of potent inflation, widespread hiring challenges and economic upheaval, “We know it hasn’t been easy.”

Higher-ups at AIM, an influential business group, have called for undertaking a “more expansive discussion about what constitutes economic health” for Massachusetts, including not just competitiveness — a theme Healey targeted in her remarks — but also ways to make the Bay State affordable and attractive for workers.

The group called in December for lawmakers and the new Healey administration to revisit and approve a suite of proposed tax reforms Gov. Charlie Baker pursued, including breaks for renters, seniors and caregivers and changes to the state’s estate tax. Those tax policies were shelved over apparent affordability concerns but supporters of the proposals say the state’s fiscal condition is strong enough to support the changes.

In its list of priorities, AIM also urged state government to reduce the individual income tax rate by an unspecified amount, deploy American Rescue Plan Act funds to reduce unemployment insurance system debt, overhaul regulations to promote new housing development, and boost spending on workplace training.

“Think of the state economy as a dating website. What do businesses and employees find attractive?” AIM Executive Vice President of Government Affairs Brooke Thomson wrote in a blog post. “Attractiveness from an economic competitiveness perspective means compatibility. Employers and employees are looking for a partner who can meet their needs and support them in the future. Employees want a counterpart that helps them feel committed, that supports their growth and happiness. These workers want to stay and to thrive in that company’s space. Creating a strong economic climate requires stability, and growth and support that leads to a long-term commitment.”

Healey made tax reform and relief, which legislative Democrats pursued and then abandoned last year, a central promise of her campaign, and she told assembled business leaders her “position on this has not changed.”

“We need tax reform. We need tax relief. Making Massachusetts more competitive and attractive means doing just that,” Healey said. “I know how important this is to the business community. Know that I will work collaboratively with legislative leaders, and our terrific secretary [of administration and finance] will as well, to help support our businesses — and families, frankly — around the state.”

She did not specify tax changes she wants to pursue. Asked after the event when she would file legislation on that topic, Healey replied, “We’ve got a budget coming in just a matter of weeks, so we’re working on that.”

The state’s highest-earning residents now also face a greater tax rate on household income above $1 million following voter approval of the long-debated surtax in November.

As policymakers begin to grapple with the best way to make use of that revenue, Healey — who will file her own state budget proposal by March 1 and get a chance to amend or veto any final version — signaled she wants to ensure the money goes solely toward education and transportation uses.

The constitutional amendment voters enacted calls for the newly generated funds to go toward those two specific areas of investment, but final appropriation authority rests with the Legislature, where top Democrats have offered varying levels of commitment to using the new money entirely to supplement, rather than replace or rearrange, existing spending.

“Now that the voters have decided, the key is making sure that that money, that return on investment, is actually happening, that the money that comes in is going toward education and transportation,” Healey said. “This will make Massachusetts a more attractive place for businesses to stay and families to benefit from.”

One idea Healey first flagged in her inaugural address and mentioned again Thursday is a new “MassReconnect” program, which the governor has said would be funded in her first annual budget and will help better align job training services with what companies need.

State-supported workforce development programs are already on the radar for many employers. In November, the current head of the Massachusetts Taxpayers Foundation cautioned that the existing distribution — which he described as “like 26 different workforce programs governed by 12 different agencies” — made it difficult to meet the needs of business leaders.

Healey also made brief mention Thursday of a FutureSkills state program that will connect job-seekers, employers and training providers. The program’s website describes it as “a once-in-a-lifetime, $200 million investment in worker skills training to expand opportunity for employers and jobseekers.”

“This is a new moment, and we know we need to do more, especially when it comes to supporting our workforce,” Healey said. “I’ve talked to many of you. There isn’t a space and industry that isn’t suffering when it comes to workforce. Our growing industries need more trained workers. There are businesses with thousands of jobs available as we speak this morning in every corner of our state, but they’re unfilled because we need more people with the skills to fill them. And this has really reached a crisis point for our economy.”

Another priority Healey described Thursday is ramping up the executive branch’s work to secure available federal grant dollars, which she described as “really, really important funding that can really help us take off here in Massachusetts.”

“I want us competing at new, historic levels for this kind of funding,” Healey said, pointing to the CHIPS and Science Act that President Joe Biden signed last year. “We’re hyper-focused on showing the federal government that Massachusetts is serious about fostering our scientific, manufacturing and business communities and that if you want a serious [return on investment], there’s no better state to get it from than Massachusetts.”

A few high-profile bids for federal infrastructure grant money have already stumbled in Massachusetts. Federal regulators rejected two U.S. Army Corps of Engineers applications for funding to support replacing the Bourne and Sagamore Bridges to Cape Cod, and the U.S. Department of Transportation declined a joint state-city of Boston request for $1.2 billion in grants toward a massive multimodal project in Allston.

The governor flagged health care investment as another area where she wants to see action. Asked by Blue Cross Blue Shield of Massachusetts Vice President of Government and Regulatory Affairs Michael Caljouw about making health care more affordable, Healey replied that despite the Bay State’s well-documented health care successes, her focus will be on “looking to find ways to drive down costs.”

“We also need to be doing more to invest resources in the drivers of high costs. How many people are in emergency rooms this morning or boarded because they don’t have access to mental health providers in the first instance, at an early enough stage? The same is true of primary care,” Healey said. “Making those investments in mental health, in primary care, are really, really important, I think, to driving down costs.”

Before he handed the reins to Healey, Baker pushed unsuccessfully in back-to-back lawmaking sessions for legislation to require an injection of additional spending on primary and behavioral health care by 30 percent by 2025.

A dashboard the Center for Health Information and Analysis published Wednesday found that primary care represented less than 8 percent of total health care spending in Massachusetts, a share that is declining.

Healey’s appearance at AIM took place the morning after Boston Mayor Michelle Wu delivered her first state of the city address, where she renewed her call for state action to give Boston its own designated seat on the MBTA Board of Directors and, with an eye on the housing crisis whose tendrils reach across the state, said Boston would “deploy every tool, every strategy, and every resource to create more housing that residents can actually afford.”