Governor Deval Patrick Signs Economic Development BillAugust 14, 2014
Bill aimed at building on the investment of education, innovation and infrastructure.
Yesterday, Governor Deval Patrick signed an “An Act to Promote Economic Growth in the Commonwealth,” aimed at building on the investment of education, innovation and infrastructure.
A major component of the economic development law is its notedexpansion of the research-and-development tax credit and its multiple initiatives to accelerate job growth. The research-and-development tax provision in the economic development bill creates an Alternative Simplified Credit (ASC) as an alternative to the traditional tax credit. ASC provides the option to claim a credit equal to 10 percent of any research expenses that exceed a base amount calculated over a period of three years. Current law allows credits only for incremental R&D spending over a set base period. For many business the base period could go back to the early 1980s; making it extremely difficult or imposable (due to the lack of records going back that far) to calculate and take advantage of the credit.
Between 2007 and 2011 there has been a 19.3 percent decline in R&D spending among Massachusetts employers to which this initiative is aimed at improving. The vast majority of research and development in Massachusetts takes place not in urban innovation districts, but in advanced manufacturing, medical device, defense and bio pharma companies throughout the commonwealth. Lawmakers are hoping that with this update and push towards R&D credits in Massachusetts this will increase and stimulate the kind of innovation that drives economic growth.
Along with signing the bill, Governor Patrick also included a number of vetoes and amendments including (but not limited to):
- A new “live theater” tax credit. This new tax credit is designed to encourage more productions of pre-Broadway and pre-Off Broadway Theater in Massachusetts.
- A provision to give local governments across Massachusetts control over the number of liquor licenses in their jurisdiction.
- $12 million for the middle skills job training grant fund to support advanced manufacturing, mechanical and technical skills at vocational-technical schools and community colleges.
- The Workforce Competitiveness Trust Fund will receive $1.5 million to prepare Massachusetts residents for new jobs in high-demand occupations, helping close the middle-skills gap and creating a seamless pathway to employment.
Initiatives to expand the Commonwealth’s world class innovation economy including:
- Expansion on the Commonwealth’s international tourism and marketing efforts, capitalizing on new connections overseas, helping to bring more businesses and jobs to Massachusetts and more tourists to our world class destinations;
- A job creation incentive under the Economic Development Incentive Program (EDIP), allowing business to receive a tax credit up to $1,000 per job created, or up to $5,000 per job created in a Gateway City, so long as the total credit per project does not exceed $1 million.