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What’s it going to take to make the Massachusetts economy more vibrant and equitable?
Governor Maura Healey laid out her ideas in detail last week, unveiling a $55.5 billion budget blueprint and a package of proposed tax credits and tax cuts that could reach nearly $1 billion in their second year.
It was a solid opening move to frame the debate in the Legislature — and elicit reactions from the powerful labor and business lobbies — over how to improve vital public services, including education and transportation, and ease the burdens of the state’s high costs and taxes.
The rookie Democratic governor took a reasonable and balanced approach with ideas culled from progressives and fiscal conservatives alike.
Groups in both camps were frustrated because they didn’t get everything they wanted. And Healey won’t get everything she wants, either. That’s how a consensus is reached.
Although the Legislature will get the final say, Healey’s first big legislative initiative is significant nonetheless.
It will test whether she can be effective by governing from the center — or at least the center as it exists in true-blue Massachusetts.
And the business community, still ticked off by the implementation of the so-called millionaires tax, has a lot riding on the outcome after eight years of a mostly positive relationship with former governor Charlie Baker.
Let’s start with the common ground.
Both progressives and fiscal conservatives lauded Healey’s pitch to help people make ends meet by creating a $600 child care and dependent tax credit, and increasing existing tax credits for renters and seniors with high property taxes.
They also welcomed her plans to spend more money on the MBTA, lock in tuition prices for students in the state university system while boosting financial aid, and help pay for community college for students 25 years or older.
But there were points of contention, too, the biggest being Healey’s call to effectively eliminate the taxes on estates up to $3 million and lower the tax on gains from investments held for less than a year to 5 percent from 12 percent.
Unions, which funded the successful millionaires tax ballot campaign, argued that the tax cuts were unnecessary and would leave less money for spending on services and aid to struggling families.
“It’s investments versus tax cuts,” Harris Gruman, executive director of SEIU Massachusetts State Council, an umbrella union that endorsed Healey, told me. “She could have done more if she didn’t do a tax cut.”
Among business leaders, there was widespread disappointment that Healey didn’t go bigger with tax cuts, which they say are crucial to making the state friendlier to businesses.
The governor’s proposed estate tax relief would still leave Massachusetts with the most onerous levy in the Northeast, according to Eileen McAnneny, a senior fellow at the Pioneer Institute. The reduction in the short-term capital gains rate, she said, only puts Massachusetts on par with other states.
In McAnneny’s view, steep income taxes on high earners hurt Massachusetts’ competitiveness because many of them are business owners who are also struggling with outsize costs for unemployment insurance taxes, health care, labor, and energy.
“The idea is to reduce the cost of doing business to mitigate the potential negative impact of the surtax,” she said in an e-mail.
But some business leaders welcomed Healey’s proposals.
”Our biggest concern at the end of the day is supporting businesses in Massachusetts and creating an environment in which they can grow,” said JC Morales, board chair of the Alliance for Business Leadership and founding partner at Surfside Capital Advisors , in a statement to the Globe. “This package begins to do that, and with additional conversations and work, we will make this an even stronger package to keep our region competitive.”
Conversation and work.
If Beacon Hill does enough of each, a compromise that equitably bolsters the economy just might be possible.
Correction: An earlier version of this story incorrectly identified Surfside Capital Advisors.
Larry Edelman can be reached at firstname.lastname@example.org. Follow him on Twitter @GlobeNewsEd.