Testimony in Support of S. 270/H. 505
An Act to Promote Inclusive Entrepreneurship and Economic Justice

November 9, 2021 (via email)

Senator Eric Lesser, Co-Chair
Representative Jerry Parisella, Co-Chair
Joint Committee on Economic Development and Emerging Technologies
State House
Boston, MA 02133

 

Dear Chair Lesser and Chair Parisella:

I offer this testimony in support of S.270/H. 505 in the hopes that it will be of value as the committee works to position the Commonwealth for a strong economic recovery. Earlier this year MassINC presented research describing small business patterns in Massachusetts with a focus on inclusive growth and development. Our study’s most compelling finding was the steady downward trend in small business starts. Between the mid-2000s and the onset of the pandemic, the rate of new businesses formed in Massachusetts fell by half. While a complex array of forces drove this downward trend, changing demographics played a considerable role. People of color make up an increasingly large share of our population. Because they lack access to growth capital, business networks, and both public and private markets, entrepreneurs of color have great difficulty launching and growing successful businesses enterprises in our commonwealth.

Remedying this structural issue is critical to the long-term growth of the Massachusetts economy. Over the past year, we have had a tantalizing glimpse of what is possible: Throughout the pandemic, the state provided unprecedented support to entrepreneurs of color; they responded, launching businesses at dramatically higher rates and bringing new vitality and energy to our communities.

An Act to Promote Inclusive Entrepreneurship and Economic Justice contains a comprehensive set of forward-thinking provisions to kindle this momentum. Many of these ideas are straightforward and we should advance them without delay. They include requiring:

• All state economic development programs to report annually on the share of public funds provided to businesses of color;
• All anchor institutions (i.e. hospitals and universities) to report annually on purchasing through state-designated minority-owned businesses;
• Each administration to detail its strategies to grow businesses of color in the state’s quadrennial economic development plan; and
• Policies and practices to ensure that public boards and commissions reflect the racial and ethnic diversity of the Commonwealth.

In addition, S.270/H. 505 includes a powerful solution to the pressure Main Street and downtown business districts face from online retailing. These traditional areas of commerce remain critical to the vitality of our communities, providing an amenity for local residents and contributing directly to the commercial tax base (and indirectly to the residential tax base). In the context of inclusive growth, they have an especially important role: downtowns and Main Street districts are increasingly home to businesses enterprises led by entrepreneurs of color.

Decades of evidence suggests business improvement districts (BIDs) can help ensure that these commercial areas remain vibrant through changing times. Well-resourced BIDs market these areas, present cultural events that draw customers, and ensure that businesses are connected to resources and assistance that will help them grow.

The financial pressure these commercial districts currently face makes it extremely difficult for them to create self-supporting BIDs. Predictable matching funds from the state would fill the gap, enabling communities across the state to build robust BIDs. This bill provides a creative funding mechanism by dedicating matching funds from a small portion of online sales tax collections.

Many of the provisions in this legislation have been drawn from models in other states, including California (anchor institution reporting), Connecticut, Florida, and North Carolina (board diversity). Together, the measures in this package can put Massachusetts in the vanguard on policies and practices to advance equitable small business development. In a state that rightfully holds great pride in its commitment to economic justice and its excellence in innovation and entrepreneurship, this is surely a position we must aspire to hold.

We thank you for this opportunity to provide testimony and encourage members of the committee to reach out if we can offer assistance as you consider this important legislation.