Issue Position: Economy

Issue Position

Just as strong state support for decentralized, local decision-making can be a more democratic and effective way of addressing issues, support for decentralized, strong local economies can also be a more democratic and effective way to meet the needs of a community. In many ways, as economic institutions and corporations have grown bigger and more impersonal, our very democracy has suffered. So too has our economy suffered, if you believe it should also serve all our people. Large corporations that dot the landscape with big box stores have largely eroded our notion of a social compact, a Commonwealth, and with it, our sense of community and belonging. It sometimes can seem that this is all just the natural course of things, that the trend has long been set in motion and cannot now be stopped; yet when one looks carefully at how our economy and society have developed, he or she can see how our laws and regulations have shaped our current situation. That need not be disheartening; conditions that are created merely by a response to a complex set of rules can be changed by untangling the old rules or replacing them with a new set. Here are a few to consider:

An Economy For People and Places

Often politicians talk of trying to attract companies to their communities or states by creating a more business-friendly climate. However, in their friendliness to corporations, they can sometimes forget that the jobs those businesses provide are meant to serve the needs of people and raise the quality of their lives. Where public money is spent or where it is foregone in the form of tax incentives, the state can ensure that benefits to corporations and businesses result in real benefits to workers and their communities, by tying the two directly together. Massachusetts should also go further, and lead the nation in establishing a more livable minimum wage, under which no worker would fall.

While large corporations can come and go, depending upon how much they may extract from a community, larger retail chain stores can be more devastating in destroying a community's sense of place and identity. Beyond the studies that have shown that these enterprises can lead to lower wages and fewer overall jobs, there is also evidence which directly links these to the decline of downtown and neighborhood business districts and village centers, which in turn severs the relationship of people to a place and to each other, leading to further declines in signs of civic life. Some states and local communities, like Greenfield, MA, have passed laws that establish an Economic (or Community) Impact Review which is triggered by big box retail store proposals above a certain size, or that generate more than a certain number of vehicle trips. Conducting an economic impact review process would go beyond the promise of jobs and cheap goods to consider how a large retail project would affect local businesses, municipal services and revenue, the environment and wider community. It asks the right questions--not simply whether a chain store will lead to "growth," but to what kind of growth.

Main Streets Fairness Initiative

A vibrant downtown or town center--or neighborhood commercial districts and squares--is important for the health and happiness of any community. A walkable public realm with strong local businesses and active civic life is what makes Massachusetts and other New England cities and towns unique places to live and visit. The design and success of these spaces are threatened not only by the lure of cheap goods at big box stores, but also through online retailers that in most cases are not required to collect the Massachusetts sales tax. Hundreds of millions of dollars are estimated to be lost as traditional brick and mortar stores unfairly suffer, and from the failure to collect the substantial revenue owed to the state by law. Some states have passed laws which allow them to require online businesses to collect the sales tax, if their sales cross a determined threshold, indicating a significant--even if not physical--presence in the state. While the issue also needs a federal solution, a statewide Main Streets Fairness proposal could level the playing field between online and physical stores, return local jobs to the cities and towns of Massachusetts, and raise revenue already owed to be reinvested into the further revitalization of the hearts of our communities.

Smart Growth Approach

Reforms to sources of revenue would ideally both incentivize and support stronger local economies. The current administration has been a leader on smart growth strategies to maximize the returns on public and private investment in places identified for future increases in development, and protect other critical areas from unwanted development. The Governor has proposed in the past a nineteen-cent gas tax increase to pay for an ambitious transportation package that would transform the state. While there should be more debate about the details of such a plan, which failed to be fully adopted by the legislature, there is no question that the state's aging transit system will stall economic activity if left largely unchanged. Because it is applied according to the amount an individual consumes and because there are often other options that are not burdened with it, the gas tax is one way to pay for improvements that is fair and progressive, particularly if the revenue it produces is equitably directed as much toward public transit, pedestrian and bicycle infrastructure, as it is to highways. If there is not yet an appetite to adopt a state strategy of simultaneously addressing economic, environmental, public health and safety issues through a gas tax, perhaps local cities and towns can be given the local option to adopt a more modest increase to reinvest in the kind of pedestrian-friendly streets that support vibrant local economies.

Another more progressive local tax option could provide communities, particularly in urban areas, the ability to weight property tax rates more heavily on land rather than buildings. Normally these two components are valued together and taxed at either one rate or a split rate between commercial and residential property classifications. This tax would split land and building values, and gradually shift more of the tax burden toward land. This would encourage a more efficient use of our land resources by incentivizing both commercial and mixed-use development to areas prioritized by the community, generally denser districts where public infrastructure investments can be more efficiently made. Why is this fairer? Under a land-weighted system, a property owner is not taxed as much for making improvements with his or her own labor or capital, but when those improvements spur others around him or her to also make private improvements or when public investments like transit or well-designed streetscapes or utilities are made through no personal effort of the owner at all, that added value is more fairly captured for the benefit of the entire community. Gateway and other cities could therefore adopt the reformed tax structure to achieve a number of different aims: more commercial activity in development of vacant lots and redevelopment of older structures; higher quality and more affordable housing as property owners no longer see a disincentive to fix up properties and the cost of scarce land is not as subject to speculation; and greater self-reliance in municipal finances as revenue is more naturally captured by increasing values, whether through private improvements on the land, or solid public investments around it. Although Pennsylvania is the only real model in America that allows this kind of tax system, Massachusetts could learn from its example and find a solution that fits our cities and jumpstarts smarter growth across the state. The basic point of state legislation would be to enable cities to have more local options, and in doing so, to make potentially better decisions about what policies would work best for them. Those communities that are satisfied with their current systems would similarly have the option not to adopt.

Through all of these policies, taxation or the absence of taxation can be realigned to better meet the needs of people. They can protect open space and small businesses in a rural town, reinvigorate the village center of a suburb as a hub of activity, and rebuild aging mill cities as great places to live, work, play, learn and raise a family. Yet all of these policies also depend on an inclusive community vision, on the ability of cities and towns to plan what they want their futures to look like and to use that comprehensive planning to guide their zoning codes, annual budgets and capital improvement plans. Some elements of pending legislation at the State House would help support cities and towns--often without the resources in their local budget for a comprehensive planning effort--to rewrite zoning codes in a manner that provides more predictability for private investment, protects open space and encourages more progress on affordable housing. As a best practice, regular comprehensive planning should also be encouraged regionally and in all communities so that residents are truly shaping how their city or town grows sustainably.

Economic Gardening Institute

We have learned how the state can be burnt by trying to attract companies to locate in Massachusetts on the promise of millions of dollars in tax credits. Certainly more transparency, stricter criteria--perhaps preferencing worker-owned enterprises rather than more mobile ones, and Benefit Corporations rather than strictly profit-driven ones--and the ability to claw back tax breaks or subsidies if those criteria are not continually met, can help to prevent the kinds of ineffective agreements we have seen in the past. Companies that come here strictly for tax or bottom line reasons can easily leave for the same. But we can turn from this model of "economic hunting" and look to a completely different model of development that recognizes the value of supporting local small businesses over national chains or multinational corporations. The idea of economic gardening is to identify and then nurture--through technical support, market data analysis and other resources too expensive for any one business to afford--those small businesses which have already been started and show potential, so that they may grow more local jobs. A handful of states have developed programs to focus on these second-stage companies through their public higher education institutions. The University of Massachusetts system, which is already engaged in various business development initiatives, would be well positioned to support their surrounding regional economies and the small business poised for growth within them. Conversely, those businesses whose seed was planted with publically-funded research ought to be encouraged to locate their start-ups in the region or state so that the "crop yield" of intellectual property is not transplanted across the country. This might be achieved through a full or partial waiver of royalties owed to the university of origin, if an enterprise decides to sink its roots into the region. A formal Economic Gardening Institute through the UMass system could be sustained through the royalties that are paid when start-ups choose to relocate, and from a shift in less effective economic development tax expenditures.

Buy Local, Invest Local

Luckily we do not need to wait to put our money where our mouth is. One of the more immediate measures that can strengthen small businesses and local economies is to deepen the impact of state funds by depositing more in local banks as Treasurer Grossman has done, and encourage cities and towns to wisely invest in its local banks. A more long-term proposal would look at North Dakota's model of a publicly-owned bank, which has helped the state fair far better than others through the Great Recession, by partnering with private banks and directing state deposits toward economic development priorities. Like many of the policies proposed here, a Massachusetts Bank could help to make our public finances and local economies more resilient. Similarly, we should explore a comprehensive purchasing policy that preferences locally and sustainably-made products. Some states have added as much as a 10% preference in bid applications, largely in recognition of research which has shown a far higher multiplier effect on the state economy of purchases from in-state suppliers. The purchasing policy could begin with the example of the next administration itself, and then extend to municipalities and publicly-funded institutions like local school districts, universities, correctional institutions or public hospitals.

Fresh Food Financing Initiative

Chief among the goods and services that public institutions purchase and provide is food. Yet not enough attention is paid to where it comes from or its quality, and most fundamentally, who has access to it. This is a moral issue. There are far too many children and families in this Commonwealth that face hunger on a daily basis, and lack adequate access to healthy food. There is far too much opportunity lost in human costs, and in economic activity. With changes to regulations in the procurement of food, the Farm to School program can be made much more robust, and expanded to institutions--particularly health--which receive public funding. As a former USDA administrator and as your next Lieutenant Governor, I will not rest until every child in our elementary schools has access to a nutritious breakfast. This can vastly improve a child's education, meet the needs of kids who would otherwise go hungry, develop healthy habits and contain long-term health care costs, and stimulate more demand to support our fishermen and farmers and local economies. In Pennsylvania, the innovative public-private Fresh Food Financing Initiative has supported the development of all kinds of corner and grocery stores, co-ops and farmer's market in traditionally underserved areas. The program has shown remarkable results with thousands of jobs created, good wages, higher property values, improved municipal finances, greater economic activity and healthier neighborhoods. So while this is listed as an economic issue, food policy is naturally--like many of the other issues raised here--a public health issue, an environmental, educational and even a long-term fiscal issue. Although the state has launched some promising programs to increase our food security, like grants for urban agriculture, a more comprehensive evaluation of our food systems can yield better results. We can shape policies that solve multiple problems so that we are not left with losses on the ledger, but instead create win-win-wins. Most of all, these policy changes and the people most affected by them need a champion. As your Lieutenant Governor, my voice and energy will be all but exhausted in this cause.

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