Governor Charlie Baker Signs Massachusetts Employee Ownership Legislation

Governor Charlie Baker of Massachusetts has signed a wide-ranging economic development legislative package that included An Act to Enable the Massachusetts Center for Employee Ownership (S.261 / H.511) that will now permanently institutionalize the Massachusetts Center for Employee Ownership (MassCEO) in the Mass. Office of Business Development. Led by a full-time director, the purpose of the office will be to conduct outreach to business owners considering their business succession options, serve as a resource hub for service providers and existing employee-owned businesses, and provide grant funding to external organizations to supplement outreach and education efforts across the Commonwealth. The legislation also created a formal Advisory Board comprised of representatives from a number of stakeholder groups including Governor-appointed representatives from Massachusetts-based ESOP companies and worker cooperatives. Fortunately, the office has already received an initial capitalization of $300,000 based on a successful budget appropriation earlier in the year.

Massachusetts has a long history of supporting employee ownership that paved the way to this successful outcome. In the 1990’s then-State Senator David Magnani introduced and passed legislation creating the Massachusetts Office for Employee Ownership and Involvement (the lead staffer drafting the legislation was Karen Spilka, the current Senate President and occupant of Senator Magnani’s former seat). Passed as a budget line item, the office was administered on a contract basis for several years by Christopher Mackin, President of Ownership Associates and an Ownership America Advisory Board Member. When the 2008 financial crisis hit, the line item fell victim to budget cuts. The loss of funding was a lesson that future employee ownership efforts needed a more durable footing in Massachusetts state government.

In 2017, Senator Julian Cyr of the Cape & Islands was successful in reviving the office as a line item in the state budget, which has since been administered by the Northampton-based ICA Group. Heading into the 2021-2022 legislative session, employee advocates across the Commonwealth put their weight behind legislation introduced by Senator Cyr and Representative Carmine Gentile to formally authorize the office and permanently institutionalize it within the Mass. Office of Business Development along with the creation of an Advisory Board. In the Fall 2021, advocates including Ownership America Founder Jack Moriarty, former Senator Magnani, Christopher Mackin, and Mass. Bay Brewing Co. (a.k.a Harpoon) CEO Dan Kenary all testified in support of the bill before the Joint Committee on Economic Development & Emerging Technologies. The bill was reported favorably out of committee in both the House and Senate (the best possible outcome) and subsequently passed by both the House and Senate as part of a broader economic development package, an outcome bolstered by a spring State House rally hosted by the Coalition for Worker Ownership and Power (COWOP).

The legislative session did not end without its share of political surprises. The MassCEO legislation was successfully attached to the annual economic development bill with support from both chambers, but the broader package was thrown into jeopardy at the last minute by a little-known 1980s ballot initiative law called 62F, which mandates taxpayer refunds in years where state revenues exceed a certain threshold (a rare occurrence). The economic development bill included its own tax relief provisions which created uncertainty as to whether the state had fiscal capacity to provide legislative relief in addition to the 62F refunds. The legislature tabled the bill at the end of its formal session in August in order to take more time to sort out the implications of 62F. Fortunately, thanks to Senator Cyr and Representative Gentile, the MassCEO had already successfully secured $300,000 in funding through a separate budget bill. As a result, it would not cost the state anything to retain the MassCEO enabling legislation in its revised economic development bill. Thanks to continued engagement from employee ownership advocates, the legislature unveiled its revised economic development bill last week that retained the MassCEO authorizing legislation, which was then signed by Governor Baker.

Massachusetts marks the second major state legislative victory for the employee ownership movement in the last six weeks, coming on the heels of California’s Employee Ownership Act which Ownership America supported as an organizational co-sponsor.