Baker details $1 billion economic development plan

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BOSTON – Gov. Charlie Baker on Thursday proposed to pour almost $1 billion over the next five years into economic development, housing and job training as part of a strategy to maintain strong job growth in the Boston region and revitalize cities and towns still struggling to take advantage of the economic upswing.

The bill the governor filed calls for new borrowing to support public infrastructure, the redevelopment of environmentally damaged brownfields and research to commercialize emerging new technologies.

It also proposes changes to state liquor laws that would make it easier for farmer-brewers and distillers to sell their products at farmers’ markets or for alcohol retailers to serve patrons at in-house restaurants.

“The legislation invests in our communities, setting them up for success, invests in the people of Massachusetts to help them get the skills that they and our employers need for them both to be successful, and invests in our innovation economy so that Massachusetts can continue to compete for the jobs of tomorrow,” Baker said at a press conference.

The largest single program in the bill would be $500 million to recapitalize the MassWorks program, which Baker said will be out of money by next year. The capital grant program supports public infrastructure projects that can unlock housing and economic development.

Housing and Economic Development Secretary Jay Ash said the administration increased the MassWorks budget by 40 percent last year, allowing the state to help fund 49 projects in 46 communities and leading to thousands of new jobs and housing units. Ash said the $500 million authorization would increase funding for the program by another 30 percent.

The administration is also proposing to move funding for brownfields redevelopment out of the operating budget and into the capital program with $75 million in borrowing. Ash said this change would not only allow for a more predictable funding source, but also allows for loans to be awarded as well as grants.

The Massachusetts economy in 2015 added more than 73,000 jobs, the strongest growth in 15 years that contributed to a 4.7 percent unemployment rate. Lt. Gov. Karyn Polito said there are still areas outside of Boston and Cambridge where cranes do not dot the skyline and start-ups are not fighting over office space.

“We have to keep that going,” Polito said. “But we also recognize that Boston’s economy isn’t necessarily the state’s economy and that many communities outside of Boston don’t have the same success in attracting, attaining and growing jobs.”

The bill earmarks $50 million for the state’s Transformative Development Initiative, a program designed to allow MassDevelopment to make long-term equity investments in properties in so-called “gateway cities” like Lowell, Lawrence and Holyoke to speed up private development.

The bill would also reform a housing incentive program to allow credits to support new construction of market-rate housing in urban centers outside of Boston, and would incentivize the building of smaller, denser “starter-homes” under the state’s Chapter 40R smart growth program.

“Economic development is everybody’s business,” Baker said.

The Retailers Association of Massachusetts expressed their disappointment that the bill did not include their request that retailers to be relieved of their Blue Law obligation to pay employees time-and-a-half on Sundays and holidays, but did clarify the rules exempting fulfillment centers for online retailers like Amazon from the wage requirements.

“That’s going to be a discouraging message to small businesses around the state that are getting hammered by the Amazons of the world,” said Jon Hurst, president of the Retailers Association.

In reaching out to local leaders, Ash said many officials are eager to get a piece of the craft brewing market that has been on the rise in Massachusetts in recent years.

“Breweries bring the millenials, the millenials create a buzz, the buzz creates activity that turns around an economy,” he said.

In addition to making it easier for local breweries to sell their beers and allowing local farmer-brewers and farmer-distillers to sell their products at the same markets where they sell their produce, Ash said the bill would allow places like supermarkets that are branching out into prepared foods and restaurants to also serve customers beer.

Despite recent acknowledgements from Treasury, legislators and administration officials that the state may well hit its debt ceiling in fiscal 2017, Baker said the new borrowing in his bill should not crowd out other capital spending plans.

“We believe that if we continue to retain the existing program we have in place and make some modest adjustments we’ll be okay for at least the foreseeable future,” Baker said, later adding, “I don’t think we’ll hit the debt ceiling in ’17.”

The governor noted the decision his budget office made in June to hold the line on borrowing, halting for the first time in six years a $125 million annual increase to the state’s bond cap. The Baker administration’s capital plan for fiscal 2016 included $2.125 billion in borrowing, and in December the Capital Debt Affordability Committee, which included a representative from the Office of Administration and Finance, determined that the state can afford to issue $2.19 billion of bonding for capital spending next year, an increase of about $65 million or 3 percent over the current year.

The bill also includes $118 million for matching grants to establish public-private research institutes focused on emerging manufacturing technologies, $75 million to train students for high-tech jobs, and $25 million to reauthorize a capital grant program for non-profit and university-led research collaboratives to support emerging sectors.

Ash said that Massachusetts already leads the nation in many innovative economic indicators, but wants to continue to build in areas like digital health, advanced manufacturing, cybersecurity and even self-driving cars.

“We are a player in autonomous vehicles and we will continue to be a player in autonomous vehicles,” Ash said, describing a roundtable set for next month with stakeholders to chart a path to “make it a major industry we can benefit from in the future.”

“We want to be a partner that can help leverage big ideas,” Baker added.

As Baker put forward a $1 billion menu of economic development tools, another 10-year, $1 billion initiative to foster the life sciences industry is set to expire in 2018. Asked how the life science initiative spearheaded by former Gov. Deval Patrick fit into his economic development plan, Baker said he wanted to give the new director of the Life Sciences Center time to figure out the future of that program.

“They still have capacity and I think the view from our point of view is that we should let the new executive director figure out what the next act, the next set of initiatives should look like from there and build at that point going forward,” Baker said.

Written by Matt Murphy