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Bay State in top tier of business-friendly states

Date: 7/19/2010

July 19, 2010

By G. Michael Dobbs

Managing Editor

GREATER SPRINGFIELD -- Last week's release of the annual CNBC survey of business-friendly states boosted Massachusetts from the eighth spot in 2009 to the fifth spot this year. While no one wants to argue with an upgrade in the national reputation of the state, local business officials wondered what the survey actually means.

Lynn Boscher, the executive director of the Greater Westfield Chamber of Commerce, noted Massachusetts' ranking of 39th out of 50 for the cost of doing business.

"It's very expensive here," he said.

He asked, "How is Massachusetts going to succeed in the future?" His answer to his question is a reduction in business taxes and fees.

"The more businesses are taxed, the less they can grow," he added.

According to the survey, Massachusetts ranked first in education, third in technology and innovation and second in access to capital. It also ranked sixth in quality of life.

On the down side, the Bay State was ranked 40th for cost of living, 39th for transportation, and 39th for the cost of doing business.

The low transportation ranking puzzled both Boucher and Russell Denver, the president of the Affiliated Chambers of Commerce of Greater Springfield.

Denver noted the transportation infrastructure of Western Massachusetts has north and south and east and west interstate highways, a busy freight rail corridor as well as Bradley International Airport. He added he doubted those compiling the survey included Bradley into the Massachusetts statistics.

What might have affected the survey was the "log jam" the state has in infrastructure improvements, he added.

Denver noted a statistic that the greater Springfield area has the largest concentration of freight trucking businesses per capita on the east coast is a testimony to easy access to the interstate highways.

While Denver welcomed the news of the state's high ranking, he questioned the "high subjective" nature of the survey.

He did see a real correlation between the state's high education and technology and innovation rankings and said the state always produces a high number of patents, especially from its colleges and universities.

Where businesses are hampered are in high unemployment insurance rates and high healthcare costs, Denver said.

Gail Sherman, president of the Chicopee Chamber of Commerce, said in reaction to the survey, "In a nation where there are so many things that shed a negative light on the economy, it is a well-needed breath of fresh air to hear that Massachusetts scored in the top five states for doing business in the country in several categories. "Being number one in education is good news for businesses that can take advantage of a well-educated workforce. Couple that with access to capital, ranked second and innovation [and] technology ranked third, a fertile environment is created that will catapult the Commonwealth out of the doldrums of low confidence and allow it to capitalize on its successes."


The CNBC survey preceded two other announcements that could be seen as good economic news. The Massachusetts Budget and Policy Center recently announced U.S. Census information to show the "amount of state and local taxes paid in Massachusetts as a share of total personal income was 10.3 percent in FY 2008."

"By this measure, Massachusetts had lower taxes than 30 other states," the report said.

Maine, Vermont, Connecticut and Rhode Island were all substantially higher than the Bay State.

"Since 2008, Massachusetts has increased several types of state taxes. At the same time, however, with ongoing revenue shortfalls, 29 other states have enacted tax increases of their own since the start of the recession. Therefore, while nationwide data more current than 2008 are not available, it is likely that Massachusetts' ranking still remains well below the U.S. average, even given Massachusetts' recent tax increases," the report added.

The other favorable news was that the Executive Office of Labor and Workforce Development reported July 15 that the state unemployment rate dropped to 9 percent from 9.2 percent in May, and the state rate remains below the 9.5 percent national rate. Both the state and national rates declined over-the-month due to decreases in the labor force.