An Amendment to Economic Development Reorganization Bill (S2345)

Massachusetts invests heavily in economic development each year – and yet we currently lack the data necessary to assess total spending or to judge the impact of our economic development investments.

If we are looking to increase the efficiency of the state’s economic development agencies, then we need to be collecting the performance management data that will allow us to make informed decisions and ensure that our economic development dollars being spent as efficiently as possible. Quite simply, you can’t manage what you can’t measure.

Without this level of accountability neither the public nor the legislature can have confidence that we are spending our economic development dollars wisely.

By providing for strong disclosure requirements and making data publicly available in a searchable database, this amendment would bring Massachusetts more in line with such states as Connecticut, Maine, Maryland, Ohio, Pennsylvania, New Jersey, New York, and Rhode Island that already have similar provisions in place.

This amendment would:

Provide transparency

• Requires the DOR to produce an annual unified economic development budget
  • Detailing tax reductions, tax credits and subsidies for economic development
  • Including all line item expenditures for any state-funded entity including quasi-public authorities
• Must be posted on the web in a searchable, easy to use format

Require uniform data collection.

Uniform reporting requirements would mean that every economic development program funded by the state would have the same data reporting requirements. Applicants would have to document their current in-state employment levels, salary and benefit structure to establish an objective benchmark from which to measure gains. Under this amendment:

• All proposals for assistance must include benchmark summaries of
  • The number of jobs prior to receiving assistance
  • Benefit levels (e.g. health insurance) provided current employees
  • Salary scale of current employees
• Also required is a summary of proposed benefits to the Commonwealth
  • Number of new jobs to be created
  • Benefit levels for these new jobs
  • Wages scale for new jobs

• Requires recipients to report annually for two years

Establishes standards and requires claw-backs when benefits are not met

• When companies receiving subsidies don’t keep their job creation promises, we should get our money back. This amendment would require the state to recapture (“clawback”) our investment when a company doesn’t hold up their end of the bargain.
• To qualify for the subsidy, the new jobs created by the company must pay wages at or above 85% of average wage for the industry and region (75% for small businesses). This encourages spending that produces living wage jobs.
• Employment may not be reduced by more than 10% over 5 years
• The subsidy per permanent, full-time job may not exceed $35,000, which is the limit set for job creation when applying for federal Community Development Block Grants.
• Section 12 empowers the Executive Office of Economic Development to waive the subsidy limit and job standards upon finding that there exist significant public policy goals apart from job creation. The policy goals would have to be explicitly stated and become the basis of annual progress reports.