Putting Massachusetts on the Road to Opportunity

An innovative approach to cultivating economic growth in the Commonwealth

WHO WE ARE
Senate Republican Caucus
Bruce E. Tarr Robert L. Hedlund Richard J. Ross Michael R. Knapik Peter Durant Ryan C. Fattman Kimberly N. Ferguson Paul K. Frost Susan W. Gifford Sheila C. Harrington Steven S. Howitt

House Republican Caucus

Bradley H. Jones, Jr. George N. Peterson, Jr. Bradford R. Hill Elizabeth A. Poirier Vinny deMacedo Paul Adams F. Jay Barrows Richard Bastien Matthew A. Beaton Nicholas A. Boldyga Angelo L. DEmilia Geoff Diehl

Donald F. Humason, Jr. Randy Hunt Kevin J. Kuros Steven L. Levy Marc T. Lombardo James J. Lyons, Jr. Shaunna L. OConnell Keiko M. Orrall George T. Ross Todd M. Smola David T. Vieira Daniel K. Webster Daniel B. Winslow Donald H. Wong

INTRODUCTION
Citizens throughout our state continue to face harsh economic circumstances and the uncertainties of local, state and national economies that are struggling to recover from one of the most difficult recessions in our nation's history. By taking decisive action now, our state government can capture substantial economic opportunities and put our Commonwealth on a path to sustainable economic growth and prosperity. We realize that rebuilding a prosperous economy is a task that reaches well beyond Beacon Hill. Last year Legislative Republicans engaged citizens, employers and organizations on a statewide 2011 G.O.P. Jobs Tour. Since then we've been working to turn ideas into a plan for action that will deliver real results. Now, we have taken our fellow citizens ideas, concerns and insights and constructed a road map that can knock down barriers to employment, incentivize investment in our economy, and put us on track to getting the 240,000 unemployed residents in our state back to work. We, as a legislative body, have a great opportunity to reform the way we create and maintain employment opportunities, while at the same time making government run more efficiently. The Republican Caucus has identified five targeted areas business regulations, education, energy, healthcare, and taxes - that are key to facilitating economic growth in Massachusetts. While we maintain that government cannot create jobs, we believe government can provide the right environment for the private sector to grow and thrive. Our goal is to alleviate the burdensome regulations and policies that drive entrepreneurs and business away from our Commonwealth. Getting individuals back to work is our top priority. The legislation outlined in this package may seem daunting to many, but it presents a real opportunity for cultivating job creation and economic growth to improve the lives of our fellow citizens. We must not be afraid to make the tough choices this legislative session. We need to roll up our sleeves and do the peoples work after all, its why they elect us. We must be vigilant in our efforts to look for innovative ways to employ and protect workers without stifling entrepreneurial opportunities for those who choose to do business in our state. By taking action on these specific steps, we can capture opportunities for growth, and put Massachusetts on the road to sustainable economic recovery and prosperity.

FACT SHEET
High Business Costs
The Chief Executive Group ranks Massachusetts the 6th worst state to do business. The Groups study polled over 500 CEOs regarding criteria that included taxation, regulation, workforce quality, and living environment. The Tax Foundation ranks Massachusetts as having the least favorable Unemployment Insurance Schedule in the country. According to the study, Massachusetts has the countrys highest maximum UI tax rate, thus, the worst maximum UI tax rate, of 15.4%. As a comparison, the lowest maximum tax rate is 5.4%. Moodys Analytics ranks Massachusetts #1 on its Cost of Doing Business Index. According to Moodys, business costs are a clear indicator of economic prospects and have a direct correlation with the pace of economic growth. This proves true in Massachusetts: the Commonwealth has a very low average annual growth rate of nearly .5%, much lower than that of most other states. Forbes Magazine ranks Massachusetts as the #1 most expensive state for conducting business. Forbes incorporates Moodys Analytics Cost of Doing Business Index which includes labor, energy and taxes in its rankings, as well as the new state tax index from the Tax Foundation that looks at the tax burden on businesses in each state across different industries. Associated Industries of Massachusetts Business Confidence Index is currently at 52.8, weaker than a year ago, when the index registered a 55.2 reading. A reading above 50 is considered positive - which this reading is barely above. According to Raymond Torto, Global Chief Economist at CB Richard Ellis Group and chair of AIM's Board of Economic Advisors, "Massachusetts employers are telling us that this continues to be a slow and halting recovery." 4

Unemployment Rates
Unemployment numbers do not offer an accurate picture of the true employment issues facing citizens of the Commonwealth. According to the Center of Labor Market Studies at Northeastern University, the number of people who took part-time jobs because of an inability to find a full-time job has grown fourfold since 2000. In the first eight months of 2011, the number of underemployed workers in Massachusetts increased by 18% to 200,500. The state-wide unemployment figures do not accurately represent the state as a whole. According to Steve Poftak of Pioneer Institute, the metro Boston area has strong employment, while some other cities in the state, like Fall River, New Bedford, and Lawrence have unemployment rates above 11%. Despite arguments that the Commonwealth has recovered from the Great Recession, the current unemployment rate is 6.8% - nowhere close to preRecession level of 4.4%.

OUR PRIORITIES
Business Regulations

Reform Regulatory Processes for Efficiency Redefine Independent Contractor Create Certainty by Reinforcing the Massachusetts Endangered Species Act Streamline and Consolidate Local Permitting Process Reform Unemployment Insurance System Reform Treble Damages for Wage Violations

Education
Incentivize Students to Complete Their College Degree by Creating a FinishLine Grant Program Empower Vocational Schools and Strengthen Collaboration with Community Colleges to Meet Demand for Targeted Skills Establish a Student-Operated Early Investment Fund to Provide Funding for Potential Start-Up Companies to Grow and Create Jobs Qualify Veterans for Licenses and/or Academic Credit at Public Institutions of Higher Learning

Energy
Require Competitive Bidding for Long-Term Renewable Energy Contracts Incorporate Small Renewable Hydroelectric Generation into the Renewable Portfolio Standards (RPS) Incorporate Large Renewable Hydroelectric Generation into the Renewable Portfolio Standards (RPS) Establish Energy Policy and Electricity Cost Reduction Commission and Review Renewable Energy Portfolio Standards Require Economic Evaluation of All Proposed Legislative Changes to Energy and Electricity Policies

Healthcare
Reform Fair Share Contribution Requirements Increase the Full Time Equivalent (FTE) Threshold Reduce Healthcare Mandates Suspend the Prescription Drug Requirement from Minimum Creditable Coverage Guidelines Reform Massachusetts Medical Malpractice Laws

Taxes
Reduce Commercial Vehicle Registration Fee

Establish a Job Creation Tax Credit Simplify and Eliminate Corporate Fees and Taxes Incentivize First-Time Homebuyer Savings Accounts Establish Angel Investment Tax Credit

BUSINESS REGULATIONS
An Act Providing Regulatory Reform to Promote Job Growth
Reform Regulatory Processes for Efficiency Creates a new regulatory analysis report for a new regulation, if requested by the Governor, Legislature, or 300 interested persons. The report will provide a cost benefit analysis detailing why an agency chose to adopt the new regulation rather than the alternative. Increases the frequency of the mandatory review period for all agency regulations, and empowers the Legislature to review regulations and offer amendments. Increases the transparency of the review and business impact processes through public hearings and appropriate documentation. Our goal with this provision is to provide greater inclusivity with the business community and transparency in the process by reforming the existing regulatory process. Redefine Independent Contractor Modifies the definition of an independent contract to language previously adopted by the Legislature in 1990. Classifies an individual as an independent contractor if they can either meet the first two requirements OR satisfy the third requirement. 1. The individual is free from control and direction in connection with the performance of a service; AND 2. The service is performed outside of the usual course of business for the employer; OR 3. The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed. 8

Our goal with this provision is to help end employer confusion and uncertainty by restoring the historic definition of independent contractors, and bring Massachusetts back in line with other states. Create Certainty by Reinforcing the Massachusetts Endangered Species Act Prohibits the Massachusetts Division of Fisheries and Wildlife (DFW) from promulgating regulations beyond the scope of the National Heritage and Endangered Species Programs enabling legislation: the Massachusetts Endangered Species Act. Our goal with this provision is to increase permitting and maintain predictability for businesses and homeowners. Streamline and Consolidate Local Permitting Process Expands the previously instituted expedited permitting program from strictly economic development sites to include sites used for the development or redevelopment of housing. Requires deadlines for permitting decisions on priority sites and encourages owners of private property to participate in the program. Our goal with this provision is to allow municipalities to provide incentives that encourage housing development within a streamlined, one-stop framework. Reform Unemployment Insurance System Aligns Massachusetts with a majority of states in terms of eligibility for and duration of benefits while standardizing the rate structures for businesses, lowering the rates for companies whose employees rarely use the Unemployment Insurance Trust Fund and increases the rates for those companies whose employees use it more.

Our goal with this provision is to make substantive changes to the unemployment insurance system while maintaining reasonable benefits for citizens of the Commonwealth, thus removing unemployment insurance as a major barrier to adding and retaining jobs. Reform Treble Damages for Wage Violations Repeals the 2008 Treble Damages Act, which requires that all violations of wage and hour laws be subjected to mandatory punitive treble damages. Removes the burden of treble damages for employers who have acted in good faith and take reasonable steps to comply with wage payment laws, but maintains punitive damages for employers who have engaged in willful misconduct of wage and hour laws. Our goal with this provision is to lower the number of wage violation lawsuits by lifting the undue burden on our employers who do not willfully violate wage laws, thereby lowering the overall cost of doing business in Massachusetts.

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EDUCATION
An Act Relative to Improving Employment Opportunities Through Access to Education
Incentivize Students to Complete Their College Degree by Creating a Finish-Line Grant Program Awards financially challenged students at Massachusetts institutes of higher education with a scholarship for the total cost of tuition and fees in the final year of their associates or bachelors degree. Our goal with this provision is to turn students into graduates, thus enabling qualified individuals with the skills and requirements necessary to gain employment. Empower Vocational Schools and Strengthen Collaboration with Community Colleges to Meet Demand for Targeted Skills Provides vocational schools increased flexibility to create new courses of study by expanding the definition of service programs to include programs such as fire safety, law enforcement, data mining, and barbering. Strengthens regional collaboration between vocational schools and community colleges by requiring vocational school district trustees and community college boards of trustees to each designate a member to serve as a non-voting member liaison to the reciprocal board. Establishes a corporate sponsorship program for vocational schools to expand not-for-credit vocationally-oriented instruction and targeted skills training provided through contracts with Massachusetts employers.

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Our goal with this provision is to empower vocational schools and encourage collaboration of those schools with community colleges and workforce investment boards to maximize their common goals of producing a highly-trained and well-rounded workforce to meet the needs of Massachusetts employers. Establish a Student-Operated Investment Fund to Provide Funding for Potential Start-Up Companies to Grow and Create Jobs In State Provides financial support to student-led Massachusetts start-up companies. Designates a qualified student from the University of Massachusetts, State University, and Community College to serve on the board which oversees all investments, providing them with invaluable investment experience. Our goal with this provision is to entice Massachusetts best and brightest students to remain in state when establishing start-up companies by providing them with the necessary financial support. Qualify Veterans for Licenses and/or Academic Credit at Public Institutions of Higher Education Allows public institutions of higher education to award academic credit to a student who is a veteran for the students experience in a relevant military occupation and/or relevant training and education completed as a component of a students military service. Authorizes relevant education, training, or service completed by an individual as a member of the United States Armed Forces or Military Reserves, to count toward the qualifications required to receive a license or certification under the authority of the Division of Professional Licensure and/or the Departments of Public Safety and Health.

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Our goal with this provision is to allow service members to use their documented training, education, and experience towards either a college degree or qualifications required for professional licensure in order to gain post-service employment.

ENERGY
An Act Relative to Cost-Effective Energy Policies and Electricity Cost Reduction
Require Competitive Bidding for Long-Term Renewable Energy Contracts Requires public utilities to competitively solicit their long-term renewable energy contracts. Our goal with this provision is to prevent Massachusetts ratepayers from shouldering the costs associated with privately negotiated longterm contracts by preventing the Cape Wind-National Grid contract from becoming the Department of Public Utilities standard for costeffective contract. Incorporate Small Renewable Hydroelectric Generation into the Renewable Portfolio Standards (RPS) Qualifies renewable hydropower as a Class I renewable source when calculating a suppliers percentage of sales from renewable sources. Increases the definition for a small hydroelectric facility from 25 megawatts to 30 megawatts. Our goal with this provision is to lower electricity costs for Massachusetts businesses and residential consumers by encouraging the incorporation of low-cost small hydropower in the Commonwealths renewable energy portfolio. 13

 Incorporate Large Renewable Hydroelectric Generation into the Renewable Portfolio Standards (RPS) Requires the Massachusetts Department of Energy to establish a carve-out within the RPS requirements that will allow hydroelectric generation, from facilities with a capacity larger than 30 megawatts, to qualify toward meeting a suppliers annual renewable generation requirements. Our goal with this provision is to lower electricity costs for Massachusetts businesses and residential consumers by encouraging the incorporation of low-cost large hydropower in the Commonwealths renewable energy portfolio. Establish Energy Policy and Electricity Cost Reduction Commission and Review Renewable Energy Portfolio Standards Creates a 10-year Commission to annually and independently evaluate environmental benefits and economic costs associated with current energy and electricity policies. Mandates the Division of Energy Resources to review the Renewable Energy Portfolio Standards every five years and report on their impact on economic growth and job creation. Our goal with this provision is to ensure the Commonwealths energy and electricity policies are cost-effective and economically sustainable. Require Economic Evaluation of All Proposed Legislative Changes to Energy and Electricity Policies Requires all Joint Committees of the Legislature and the House Committee on Ways and Means to consult with the Energy Policy and Electricity Cost Reduction Commission regarding economic costs of proposed changes to energy or electricity policies prior to reporting favorably on bills that institute such changes.

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Our goal with this provision is to increase transparency, ensuring that the Legislature and the citizens of the Commonwealth are aware of how proposed energy programs and policies will impact businesses and residents prior to implementing such policies.

HEALTHCARE
An Act Relative to Reducing the Healthcare Burden on Businesses
Reform Fair Share Contribution Requirements Removes the requirement that Massachusetts employers insure out of state residents. Ensures that an employee or the spouse of an employee, who elects a lower cost healthcare coverage option, will not be counted towards the Full Time Equivalent (FTE) requirements under the fair share contribution guidelines. Our goal with this provision is to provide economic relief to small businesses, especially those located in border cities and towns that are unable to afford health insurance for their employees. Increase the Full Time Equivalent (FTE) Threshold Raises the Full Time Equivalent threshold from 10 to 50 employees, which will mirror the federal law. Our goal with this provision is to relieve Massachusetts small businesses with 50 or fewer FTE employees by giving them greater flexibility in providing healthcare coverage Reduce Healthcare Mandates Imposes a moratorium, from effective date of the bill until January 2014, on all new healthcare mandates. 15

Allows mandate-free and mandate-lite products to be offered in the healthcare market. Requires the Legislature to send all legislation dealing with healthcare mandates to a study pending a review by the actuaries at the Division of Health Care Finance Policy (DHCFP) and directs the DHCFP to study the fiscal impact of the proposed mandated healthcare bill on municipalities and small businesses. Our goal with this provision is to prevent any new financial burdens on small businesses while ensuring close review of any proposed future healthcare mandates. Suspend the Prescription Drug Requirement from the Minimum Creditable Coverage (MCC) Guidelines Suspends the prescription drug requirement from the Minimum Creditable Coverage (MCC) guidelines. Our goal with this provision is to provide relief to employers and employees struggling to provide and obtain coverage with unaffordable premiums. Reform the States Medical Malpractice Laws Requires that expert witnesses testifying in an action against a physician be board certified in the same specialty as the defendant physician. Establishes that a defendant in a medical malpractice case only be liable for the amount of damages allocated to that defendant in direct proportion to his/her percentage of fault. Makes an apology by a healthcare provider inadmissible as evidence in a claim for medical malpractice. Our goal with this provision is to reduce healthcare costs for consumers and employers in the Commonwealth which will in turn drive down the cost of doing business in Massachusetts. 16

TAXES
An Act Incentivizing Job Creation and Reducing the Burdens on Small Businesses
Reduce and Cap Commercial Vehicle Registration Fees Caps the annual increase of fees on commercial vehicles registered in Massachusetts to no more than 2.5% of each fee, and discounts the commercial vehicle registration fee by 10% for businesses registering five or more commercial units. Requires the Registry of Motor Vehicles to furnish a report on their recommendations to make Massachusetts a more competitive state to own and operate a commercial vehicle. Our goal with this provision is to both incentive business owners to register their commercial vehicles in Massachusetts as opposed to neighboring states, while making the commercial vehicle registration process more accommodating. Establishes a Job Creation Tax Credit Applies a tax credit to companies who increase their net employment figures in Massachusetts. Rewards companies that have shown increased employment numbers by allowing them to claim a tax credit equal to 50% of the amount paid by the company as salary attributable to eligible jobs created by the company to the extent that the salary was subject to Massachusetts payroll taxes. Our goal with this provision is to stimulate hiring with market-driven job creation that puts Massachusetts residents back to work.

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 Simplify and Eliminate Corporate Fees and Taxes Eliminates the $456 a year minimum corporate income tax payment and $500 incorporation fee. Removes the collection of unequal installments of estimated corporate taxes and replaces it with equal tax payments of 25% every quarter. Our goal with this provision is to encourage in-state business creation and to provide predictably throughout the year for small businesses. Incentivize First-Time Homebuyer Savings Accounts (HBSA) Allows individuals to create a tax-free account to save up to $4,000 per year for first-time home-buying expenses. Enables the conversion of existing savings accounts (savings, CDs, IRAs) into HBSA, provides a tax credit for up to $5,000 on previously taxed savings, and allows for tax-free withdrawals from a HBSA for qualified home-buying expenses. Imposes a penalty of up to 10% for non-qualified expenses, which will be used to help fund a Closing Cost Assistance Program. This program will provide grants of up to $2,500 to cover closing costs for individuals who maintain a HBSA and have an income equal to 90% or less of the median area income. Our goal with this provision is to provide tax-free savings assistance to first-time homebuyers and ensure that Massachusetts workers have access to affordable housing opportunities. Establish Angel Investment Tax Credit Provides Angel Investors with a tax credit of 15% of the amount of cash invested in a small business start-up. Increases investment tax credit to 25% if the start-up is located in an Economic Target Area; a low-income part of the state which has experienced major layoffs or has a commercial vacancy rate of at least 20%. 18

Caps the total amount of credits at $10 million for the first 3 years, $5 million for the following 5 years, and expires at the end of 2019. Our goal with this provision is to incentivize entrepreneurs to start and build companies in the Commonwealth while improving the workforce and quickly improving economic activity.

Media inquiries should be directed to: Peter Lorenz Communications Director Office of the House Minority Leader (617) 722-2100 Troy Wall Communications Director Office of the Senate Minority Leader (617) 722-1600

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