Gov. William F. Weld of Massachusetts addressed a joint session of the state legislature yesterday and urged lawmakers to adopt several new plans to stimulate the state's economy, including the creation of an umbrella bonding authority.
In his speech, the Republican governor also proposed an eight-point plan to stimulate job growth, improve the state's economic position versus other states, and eventually phase out the state's capital gains tax on investments.
Yesterday was the first time since the state of the state address last January that Gov. Weld has addressed a joint session of the state legislature. Other than a state of the state address, the only time former Gov. Michael Dukakis addressed a joint session was when he announced his selection of a running mate for the 1988 presidential election.
Gov. Weld's speech follows last week's credit-rating upgrade of the state's general obligation debt and, according to the governor, "the end of the state's fiscal crisis."
Standard & Poor's Corp. raised the rating on Massachusetts general obligation debt and related guaranteed bonds to A from BBB, while Moody's Investors Service upgraded the GOs to A from Baa. Both agencies cited the state's improved financial status, highlighted by significant spending cuts, as the impetus for the upgrades.
Fitch Investors Service rates the state's GOs A.
"All of us in state government have done important work in the past 20 months," Gov. Weld said. "But while the state budget crisis has abated, the recovery has not made its way to our state's economy."
Gov. Weld additionally challenged the legislature to take appropriate action on programs that will help end the "jobs crisis" for thousands of families in the state.
Peter Lucas, spokesman for Charles Flaherty, speaker of the Massachusetts House of Representatives, said the legislative leadership would make no comment on the content of Gov. Weld's speech until presented with concrete plans.
"The governor has done this before," Mr. Lucas said. "We have to see the specific plans for legislation, and we have nothing to look at now."
The administration's plan includes the establishment of a $30 million Emerging Technology Fund to provide start-up companies with sufficient leverage to build manufacturing facilities in Massachusetts.
"By Christmas, five Massachusetts bio-tech companies will decide where to expand their operations," the governor said. "The fund will ensure that companies with high growth potential have sufficient leverage to build manufacturing facilities in the state."
To stimulate growth of smaller companies, Gov. Weld proposed the creation of a $10 million small-business capital access program.
"As a similar program in Michigan has illustrated, by devoting just $10 million in state funds to back up loans, we will leverage up to 20 times as much private financing," he said.
The third proposal would create the Massachusetts Development Agency, which would serve as an umbrella to the state's 10 quasi-public economic development authorities.
"We've got an alphabet-soup of agencies - MIFA, MEFA, HEFA, CEDAC, MTDC, ISP, CDFC. BSSC. MGLB, MMC - but very few people even know what these letters stand for," the governor said. "Ten-stop shopping is no substitute for one-stop shopping.
"Unfortunately, our agencies are fragmented," he continued. "These agencies do what they do well, but their scope is small and they operate within a flawed system." Gov. Weld then once again called upon the legislature to phase out the state's capital gains tax.
"The best way to create more employees is to create more employers," he said. "We should not be marching off 15-yard penalties against people who are investing in job-creating ventures."
Gov. Weld said that in order to be competitive in the New England area, the state must enact two programs. First, he proposed to triple the size of the state's investment tax credit to 3%. And second, he "strongly" recommended the creation of urban enterprise zones.
But remaining competitive in New England was not the only goal the governor voiced.
"I also want to devote $10 million to guarantee loans made to small businesses that export," he said. "The window we have opened for international trade [through the governor's recent trade missions] won't be open forever; our companies must sink roots into global markets."
Lastly, Gov. Weld addressed capital spending required to improve the state's infrastructure.
"We already are spending more than $1.4 billion in state and capital funds on construction-related projects which create short-term jobs and improve our infrastructure. But that is not enough," the governor said. "I propose to devote $100 million annually, for the next five years, to capital projects that will stimulate long-term job growth."
Gov. Weld said these projects would include lowering statewide rail beds to allow for double-stacking of railcars, installing information links between the state's high schools, and renovating stateowned land.
Dominic Slowey, spokesman for administration and finance secretary Peter Nessen, commented that "the real beauty" of Gov. Weld's plan is that it will require no additional state borrowing. "This will all be done within the scope of the five-year plan the governor proposed last January," he said.
Mr. Slowey added that the funds to support the programs would have to come from other areas. "State building maintenance and some housing funds may have to be used," he said. "However, I don't suspect any funds will come out of the state's construction, transportation, water, or sewer projects."
In January, the governor proposed a somewhat similar plan to the legislature. In that state of the state address, Gov. Weld asked for the cut in capital gains and a one-year, 20% investment tax credit. However, according to Mr. Slowey, the governor was unsuccessful in getting those measures through because of the state's fiscal crisis.
"The Democrats in the legislature will probably hold off on deciding about these programs until the November election is over," Mr. Slowey said. "Whether or not the governor keeps his veto-proof legislature will be important.