fb-pixel Skip to main content
CHESTO MEANS BUSINESS

Pressure builds on state government to help businesses deal with the pandemic

All eyes will be on the Baker administration on Friday to see what new relief is proposed.

Mike Kennealy, Housing and Economic Development Secretary, spoke during the state's daily coronavirus press briefing in the Massachusetts State House on June 19. All eyes will be on Kennealy on Friday during a hearing to review a potential stimulus bill.Chris Van Buskirk

The federal government has pumped billions of dollars into the Massachusetts economy to help businesses and workers cope during the COVID-19 pandemic.

Now, it is the state government’s turn.

The Legislature’s economic development committee will hold a public hearing on Friday to review a stimulus bill filed by the Baker administration mere weeks before the pandemic abruptly closed much of the state’s economy.

Everything changed almost overnight, of course. Rather than turbo-charging an already powerful engine, state officials now want to prevent a sputtering machine from stalling out.

They have moved some policy measures along in response, such as bills that allow notarizations to happen remotely and restaurants to sell beer and wine to go. But a broad economic development bill? We are still waiting.

Advertisement



Unlike Congress, state lawmakers need to pass a balanced budget every year. Money is tight, to say the least: The Massachusetts Taxpayers Foundation recently estimated that state tax revenue in the next fiscal year will drop by $6 billion, or nearly 20 percent, from what state officials initially anticipated before the coronavirus. (Suddenly, that $3.5 billion rainy day fund doesn’t look so big anymore.)

But state officials do have some resources. There should be room in the state budget for targeted business help, assuming more federal aid for states comes through from Congress. They can also borrow money by issuing bonds. And the Baker administration controls millions in federal block grants that advocates want to see deployed as quickly as possible.

The hearing on Friday will last for much of the day. All eyes will be on Mike Kennealy, Governor Charlie Baker’s point person for economic development. (He is due to speak at 1 p.m.) Kennealy led the effort on behalf of the administration to craft the latest economic development bond bill, which would spend $240 million over a five-year period.

Advertisement



Will Kennealy propose changes to reflect the new state of emergency? The committee leadership expects some modifications. But a spokesman for Kennealy declined to respond to questions on Thursday, saying he wouldn’t have anything to share before Friday.

In a legislative hearing earlier this month, Kennealy said the state can’t come anywhere near the $15 billion in federal help that has come to Massachusetts through the Paycheck Protection Program, a disaster loan program, and other efforts. State officials should look at opportunities to fill in the gaps. The original bill focused on housing creation; Kennealy probably won’t give up that priority, even as he faces new urgent needs.

Tourism leaders from Boston, Cape Cod, and Western Mass. will push on Friday to protect the industry’s tiny slice of hotel taxes, some $10 million a year, and will again ask for the authority to create localized hotel taxation districts to fund regional marketing efforts.

The Massachusetts Association of Community Development Corporations, meanwhile, will continue its campaign for small-business assistance. The original bill included $10 million for community development financial institutions to reach underserved populations with small-business loans. The Mass. Association of CDCs would like to see that increased to $35 million.

Joe Kriesberg, head of the association, says the Baker administration should consider expanding its annual borrowing cap beyond the current limit of $2.4 billion to accommodate the state’s new housing and economic development needs.

Advertisement



Kriesberg is also pushing Kennealy’s office to distribute small-business grants as soon as possible from the state’s new allotment of Community Development Block Grant funds. The first distribution, some $9.5 million, could be announced as soon as Friday, and Kriesberg said the state has at least $26 million more to work with. Likewise, the Black Economic Council of Massachusetts will also speak up in favor of grants to help businesses owned by people of color.

It’s not all about cash, though. Legislators also can ease the burden on small businesses through policy changes. One example: a bill to help the hard-hit restaurant industry. This measure, among other things, would waive any interest imposed on delayed meals taxes and would cap the fees that meal-delivery companies charge. The House approved the bill, but the Senate hasn’t acted yet. Bob Luz, president of the Massachusetts Restaurant Association, said he remains hopeful after meeting with Senate President Karen Spilka (by Zoom, of course) on Wednesday to discuss its prospects.

Senator Eric Lesser, cochairman of the economic development committee, said time is of the essence. Every day brings more news of economic devastation. He wants the committee to advance a bill within the next few weeks. (The Legislature is still working with a July 31 deadline for all major bills like this one.) Many of his colleagues in state government, he said, are dramatically underestimating the scale of response needed.

Advertisement



Ideally, Lesser would like to see a bill that helps small businesses with their cash-flow crises and prepares waves of displaced workers for new careers. Suddenly struggling hospitals and universities, long reliable bedrocks of the region’s economy, also need to be stabilized.

Yes, the state might need to borrow more money. Could it hurt the state’s credit rating? Maybe. But overly high unemployment is a worse alternative. The risk, Lesser said, is in doing too little to address this problem, not in doing too much.


Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.