Page 10 - BusinessWest April 1, 2024

EDITORIAL >>
Time to Reverse Some Trends
The numbers are alarming.
Indeed, state tax revenues have fallen below projections for seven consecutive months now, and the shortfall is beginning to put some real pressure on the Commonwealth’s abil- ity to spend what it needs to spend to support vital programs.
Earlier this year, Gov. Maura Healey, citing the lower-than- expected tax-revenue collections — they were running nearly $800 million, or 4%, behind the state’s original projections at the time, and the estimated shortfall for the fiscal year is now pegged at $1 billion — slashed $375 million in spending, cutting hundreds of millions from programs that provide outreach for seniors, behavioral-health supports, and other services.
These cuts hurt, and they may be just the first, with more to come impacting other vital services that communities large and small provide to their residents.
While the numbers are cause for concern, what’s behind them should prompt even more concern. Indeed, while debate on why the revenues continue to decline continues, it seems clear that the state has tipped the pendulum too far in the wrong direc-
tion when it comes to taxing businesses and wealthy individuals — especially when it comes to the so-called millionaire’s tax — and, at the same time, it’s spending too much, especially when it comes to housing the thousands of migrants that have made their way to the Commonwealth.
Jay Ash, CEO of Massachusetts Competitive Partnership, a non- profit, nonpartisan organization, noting that the state ranks 46th in state tax climate, including 44th in personal income tax, recently told a Boston media outlet what that dubious ranking means.
“We’re just losing our competitiveness. We have states around the country that are cleaning our clock. We’re no longer com- petitive when it comes to taxes. What the pandemic has done
is showed us that business can take place away from the bricks and mortar that it was always tied to. So businesses, the people
EDITORIAL >>
who run those businesses, investment, are all flowing to places where it’s easy to do business, and that’s not Massachusetts’ call- ing card.”
Places like neighboring New Hampshire, which is consider- ably more tax-friendly. And it’s not just businesses. Wealthy indi- viduals are leaving the state as well, and the millionaire’s tax, which was enacted by referendum and imposes a 4% surtax on taxable income over $1 million, is likely a big reason why.
While the tax has certainly brought in new revenue — as much as $1.5 billion for 2023, according to some estimates — those gains are being offset by the loss of revenue, talent, and, eventu- ally if not already, jobs. Indeed, the millionaire’s tax will wind up doing much more than keeping desired free agents from joining the Patriots, Red Sox, Celtics, and Bruins. It will contribute to a brain drain that will have a long-lasting impact.
As for spending, the state has long had a spending problem in general, and now it has another one — the steadily rising cost of housing and other services for the migrants pouring into the Commonwealth.
State Sen. John Velis, a Westfield Democrat who was among the National Guard members deployed to buttress the state’s shelter system last fall, told the Boston Globe earlier this year that Healey’s imposed budget cuts were “a warning shot” about the financial pressures wrought by the influx of migrants and the demands it has put on the state.
“A dollar is a dollar. And state money is state money,” Velis said. “I don’t know how I can continue to support more funding for [the shelter system] without some type of notion of where does it end or how are we limiting it?”
The state has to answer those questions, and, overall, it needs to reverse the trends that have brought such serious, and dan- gerous, reductions in overall revenues and pressure on the state budget. BW
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MGM Sale Rumors Not Surprising
When the report surfaced on March 21 that MGM Resorts International is exploring the sale of its casino opera- tions at MGM Springfield and Ohio’s Northfield Park, it should not have come as a shock to anyone.
Indeed, rumors about MGM shedding the Springfield property from its portfolio of casino holding have been floating around since ... well, since the facility opened its doors in August 2018.
And they have persisted, primarily because the casino has, to put it mildly, underperformed, at least when it comes to the expectations MGM had when it decided Springfield would be a good entry point for the Massachusetts market.
MGM projected that a Springfield casino could reap $34 mil- lion in revenues a month. The reality is, it hasn’t come close to that number, with $26 million the first month it opened being the actual high-water mark.
The casino has had to endure a pandemic and increased com- petition from several points on the compass — and there was already formidable competition not far away in the form of well- established Connecticut casino complexes.
But from day one, when the long lines that were expected to form outside MGM to check out the shining new attraction failed to materialize, it was clear that this facility was not going to per- form as hoped, and it was going to become a drain on the parent company, which invested $1 billion in its creation.
That became clear when Bill Horbuckle, MGM CEO, told reporters after meeting local officials last year, “our original valua- tion of this market simply was off — full stop.”
So what now?
Talks of a sale are in the preliminary stages, and nothing may come of this. If MGM is intent on selling the property, we hope it will be to a responsible party, and maybe even a local party, that can somehow change the trajectory of the property and at least continue to make it a key contributor to the local economy.
From the start, we have said that MGM Springfield was not going to magically change the landscape and transform the West- ern Mass. economy. But it would be an important addition to the mix and would bring people to the region.
It has done that, to some extent, but it simply hasn’t performed as MGM Resorts expected it would and needs it to.
“The news of MGM exploring the sale of MGM Springfield is both surprising, as they’ve become a fixture in our community, and unsurprising, as the rumors of their fickleness to the site started even before a shovel was in the ground,” state Sen. Adam Gomez said. Other local elected officials have even stated they won’t be sad if and when MGM leaves town.
Not knowing who or what might come next, we won’t go that far.
But we will say that Springfield and this region could certainly do much worse than what MGM has brought to the 413 — and that anything worse would be a serious setback to the South End, Springfield, and the area’s economy.
Almost from the day the casino opened, people have been ask- ing, “what will happen if MGM sells the property?” We may soon be finding out. BW
10 APRIL 1, 2024
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