Economic development reform bill missing key transparency provisions

• Forming a performance management office to evaluate state economic development investments;
• Requiring new administrations to develop a statewide economic development strategy; and
• Establishing a sunset commission to disband agencies and commissions that have accomplished, or are failing to accomplish, their objectives.

Noticeably absent from the bill are provisions that provide for greater transparency in economic development spending. Without data to quantify the impact of state economic development investments, how will the office measure performance? And why should incoming administrations craft strategies for the future without the benefit of knowing what state investment has (or hasn’t) accomplished in the past?

In addition to providing data critical to informed decision-making, the Senate President’s bill could have also given an independent commission the ability to act on it. Unfortunately, the proposed sunset commission would not have oversight over the state’s economic development tax incentives, even though these tax credits consume many times more taxpayer dollars than state agencies.

Giving the commission these powers would make sense because past experience shows the legislature has little stomach to address economic development tax incentives that aren’t functioning properly. A 2004 report by Inspector General Gregory Sullivan, for instance, painted a dismal picture of the state’s Economic Development Incentive Program (EDIP). Despite the unflattering report, no steps were taken to address the problem until late last year (and just before the Boston Globe published two stories based on two years of investigative reporting on the program). The legislature has proven similarly unwilling to take a hard look at the state’s film tax credit, which Michael Widmer recently labeled the worst tax credit he has seen in his 20 years at the Massachusetts Taxpayer’s Foundation.

Gov. Deval Patrick last year proposed greater disclosure about who is receiving state tax credits and their success in generating jobs. His initiative was spurred by reporting in CommonWealth magazine, particularly an opinion piece written by Greg LeRoy. The governor’s measure passed both branches of the Legislature, but stalled when Patrick opposed a Senate amendment that would have shielded the names of tax credit recipients from public view. Patrick has included his transparency proposal in his budget for next year.

Senator James Eldridge isn’t waiting to see what happens with the governor’s proposal. He intends to offer an amendment to the Senate President’s bill during Thursday’s debate that would provide strong disclosure requirements and make the data publicly available in a searchable database. This 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.

The vote on this amendment will provide a good measure of whether the bill’s economic development planning components are a sincere effort to protect taxpayer investment.

Benjamin Forman is Research Director of MassINC