By Gintautas Dumcius
and Michael P. Norton
STATE HOUSE NEWS SERVICE
BOSTON, OCT. 31, 2006….Sweeping Democratic candidate Deval Patrick into governor's office will create "one-party government" not seen since Michael Dukakis's days at the State House, Republican Lt. Gov. Kerry Healey's running mate said Tuesday.
During the Dukakis administration, the last time Democrats held both the House, Senate, and the Corner Office, there were "significant tax increases across the board," Reed Hillman, a former state trooper and state lawmaker, told business leaders gathered here to discuss concerns about state competitiveness.
In Dukakis's last four years, state spending went up 54 percent, Hillman said, eventually leading to layoffs of policemen, teachers and firemen. "Tax increases destroy jobs. I can't say it more succinctly than that," he said, noting that Healey has signed a pledge not to raise taxes and Patrick hasn't, instead pledging to work with the AFL-CIO, which "should be a little scary to businesses."
Patrick has repeatedly said he has no plans to increase taxes.
"We need a balance, we need two-party government," Hillman continued, pointing to the Democrat-controlled Legislature, Congressional delegation, and "almost every mayor" in the state. "I would say whether you're a Democrat, or an unenrolled, or a Republican, you have a stake in two-party government."
In front of a small crowd at the Omni Parker House breakfast to discuss a conservative Pioneer Institute new report that suggests the state is losing its competitive advantages, Hillman also pushed unemployment insurance, auto insurance, and welfare reforms, and the creation of one highway agency.
Before delving into the institute's report, released yesterday, Rep. Daniel Bosley (D-North Adams) offered a quick rebuttal, calling Hillman's talk of one-party rule a "fallback position."
"I was under the impression that the Republican Party was not in favor of affirmative action," said Bosley, representing the Patrick campaign and drawing laughter from the crowd. "And if you think we're one party as Democrats, come to a Democratic caucus."
With conservatives, liberals, and "middle of the road" Democrats, "we fight like hell in those Democratic caucuses," Bosley told a crowd of over 100 individuals from local business circles.
In his remarks, Hillman said the state has one of the highest unemployment insurance tax rates in the nation. At $688 per capita per year, the tax creates a "huge disincentive" for businesses looking to locate in Massachusetts and incentive to look to New Hampshire, where the tax is half of what it is here, he said.
Individuals also only need to work for 15 weeks to qualify for benefits here, the shortest period in the U.S., and can collect unemployment insurance for up to 7 and a half months, he said. "Kerry and I are committed to reforming that and make Massachusetts more competitive to businesses," he said.
Massachusetts employers have long paid unemployment insurance rates that rank among the highest in the nation. A report filed with the Legislature last week by the state Department of Workforce Development showed Massachusetts with the third highest estimated annual per-employee unemployment insurance costs. The $651 per employee cost was double the national average of $325, which was based on U.S. Department of Labor statistics.
In a separate letter to business leaders, state Division of Unemployment Assistance Director Edward Malmborg said the Massachusetts unemployment insurance trust fund had just under $1 billion in it on September 30.
Malmborg estimated that the fund would dish out $1.18 billion worth of benefits this year and collect about $1.6 billion from employers.
The state's unemployment insurance trust fund report, citing forecasts from economy.com, also points to some sobering economic projections. The report predicts slowing wage growth through 2010, a relatively flat unemployment rate over the next four years (ranging between 4.8 and 5.1 percent), and a 2.4 percent increase in the size of the state's labor force between 2006 and 2010.
Unemployment insurance is a perennial topic of heated debate on Beacon Hill. Republican governors have long sought to bring benefits in line with those offered in most other states and to require workers to work longer in order to be eligible to receive benefits. Democrats who control the Legislature, saying such changes would hurt workers, have turned those proposals down in favor of more modest reforms and increases in the rates that determine employer contributions.
Auto insurance is another problem, Hillman said, with the current system keeping the "major players" in the insurance industry out of the state because of heavy regulation. "We think that's something that's long overdue for reform and we're going to work as hard as we can to bring those players in," he said.
Cost savings could be found in a merger of the state highway agencies, creating only one human resource department, one engineering department, and one legal department: "We want to see an aggressive merger going forward," Hillman said, and added that they hope to see abolition of tolls west of Route 128 next month.
Bosley, who sat in the front row for the presentation from the Pioneer Institute and Global Insight, focused much of his remarks on the report, which he said he read last night while watching the NBC reality show "Deal or No Deal," with comedian Howie Mandel.
The report, which studied nine industries and compared Massachusetts to six other states, points to high housing costs and high land costs as a culprit in helping Massachusetts to steadily lose one of its competitive advantages: a skilled workforce. High energy, unemployment insurance, and rent costs also make a case for companies to move to other states, where they could make higher profits, the report said.
Given how quickly new technologies develop, Bosley said, the Legislature must stay engaged with the business community, as well as public higher education, after passing laws affecting businesses, noting in particular the so-called "I-cubed" bill and a $437 stimulus package, many parts of which Gov. Mitt Romney vetoed and the Legislature restored before lawmakers adjourned for the summer.
Lawmakers should also continue to work with Devens, where Bristol Myers-Squibb is building a much-touted $660 million manufacturing facility, and aid in developing a South Weymouth air base, Bosley said.
The Legislature's Committee on Economic Development and Emerging Technologies, which Bosley co-chairs with Sen. Jack Hart, will attempt to make sure initiatives included in the economic stimulus law are effective.
"One of the problems that you have with government is we do things and then look for something else to do," Bosley told the News Service after his speech. "We need to anchor and consolidate the things that we've done to make sure that it works well and actually does what we think it 's supposed to do and then we'll move and continue to look at how we can contribute to the economy."
Former state lawmaker Peter Larkin said the report may have been looking at "too small a universe."
"The competition we're faced with is international in scope," said Larkin, now a principal at Public Policy Advisors, with offices in Pittsfield, Boylston and Boston.
"Cost will never be our competitive advantage," said Alan Macdonald, executive director of the Massachusetts Defense Technology Initiative.
"A skilled workforce is truly the thing that separates us as a regional economy," and along with the cluster of technology firms, helped the state during the U.S. Department of Defense's Base Realignment and Closure (BRAC) process, he said.
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