Take the net departures of all the people who have fled Massachusetts in the past five years, and you would have a city the size of Norfolk, Virginia, nearly 240,000 people in all. Why they are leaving, and how to keep more from following, is an important topic in this year’s Massachusetts gubernatorial campaign.
The South and West of the United States are filling with people fleeing from high-tax, high-cost-of-living states in the Northeast. Much of the rest of the country offers better, cheaper living than the Northeast, and a good example is Massachusetts.
Expensive for Business
Massachusetts has done a good job of shedding its “Taxachusetts” image, but it remains an expensive place to live and do business. Forbes magazine reported in May that Boston was the most expensive place in America to do business. Business costs there are 40 percent higher than the national average, according to economists at Economy.com.
A study released in late May by Barry Bluestone, director of the Center for Urban and Regional Policy at Northeastern University in Boston, found housing costs in Massachusetts are a major drag on economic growth. The state desperately needs more housing if it is to stem the tide of out-migration and improve its growth prospects, the study concluded. The New England Economic Partnership concluded earlier in May that Massachusetts’ economic growth through 2010 would be in the bottom tier of New England states.
Massachusetts gubernatorial candidates debated in May how to keep residents from leaving for other states. Democratic candidate Deval Patrick proposed creating new high-speed commuter rail between Boston and the satellite communities of Worcester and New Bedford. Fellow Democrat Chris Gabrielli wants to invest $1 billion of taxpayer money in stem cell and other high-tech research. There were various Democratic proposals for raising the minimum wage.
Republican Lt. Gov. Kerry Healey offered very different proposals. She suggested eliminating the “temporary” .3 percent income tax hike passed in 2002, bringing the state income tax down to 5 percent from the current 5.3 percent, and suggested creating incentives to build more housing, offering tax-free savings accounts to first-time home-buyers, and cutting the unemployment insurance tax.
Focused on Competition
“Healey is focused on making Massachusetts a more competitive place to live and do business,” said campaign spokesman Nate Little. Healey wants to do that, Little said, by “reducing our highest-in-the-nation business costs, cutting unemployment tax rates, and increasing the housing stock.
“One of the things we’re concentrating on is providing incentives to local governments to increase housing stocks,” Little said. “Her plan is not to force local communities to increase housing, but to provide incentives. It can’t be a one-way street from the state government or the towns. Economic growth in Massachusetts really depends on our ability to provide housing that is affordable for the workforce.”
Healey wants to increase state aid to local governments and streamline the building permitting process. “Permitting can take as long as five years,” Little said. Some towns have cut their permit wait to 180 days, and Healey wants to help local governments duplicate that effort statewide.
In early May the Boston Globe surveyed expatriate Bay Staters to find out why they left. The top two answers were to find a better job and a lower cost of living. Healey’s campaign says her proposals are intended to address both of those issues.
New Hampshire Exemplary
To see what Massachusetts is up against, all one has to do is drive half an hour north of Boston. The Tax Foundation ranked Massachusetts as having the 27th-best business tax climate in the nation this year. Neighboring New Hampshire is ranked sixth-best.
New Hampshire has no sales or income tax, and its per-capita tax burden is nearly $4,000 lower than Massachusetts’. Not surprisingly, New Hampshire’s southernmost communities have boomed with Massachusetts expatriates, and they tend to vote against tax increases.
Anti-Tax Sentiment Strong
Southern New Hampshire is undergoing something of an anti-tax revolt right now. In the past year communities across the southern tier have consistently and overwhelmingly voted for anti-tax candidates and against local spending initiatives.
The conventional wisdom among New Hampshire old-timers is that former Massachusetts residents have turned the state more liberal. At least on spending issues, however, residents of the Massachusetts border communities tend to vote conservatively–often more conservatively than native Granite Staters up north.
Andrew Cline ([email protected]) is editorial page editor of the New Hampshire Union Leader.
For more information …
The Massachusetts housing cost study by Barry Bluestone of the Center for Urban and Regional Policy at Northeastern University is available at http://www.curp.neu.edu/publications/reports.htm#sustaineconomy.