The Massachusetts Legislature has reached the halfway point of a 2011-2012 session that has so far been encouraging for employers.

Lawmakers and Governor Deval Patrick appear to have embraced the idea that the only way to solve the commonwealth’s long-term fiscal issues is through economic expansion and job growth. That has meant not only balancing the budget without taxes and adding to the reserve fund, but taking steps to control business costs and make government work efficiently.

The most encouraging development of 2011 was a growing consensus among policymakers about the need to address the two most troubling issues facing Massachusetts employers – the rising cost of health insurance premiums and escalating electric rates. There is not yet agreement about how to solve the twin problems, but AIM looks forward to working with public and private decision-makers in 2012 to hammer out a resolution that will remove two key impediments to job growth for Massachusetts.

AIM remains concerned about the second half of the session that ends on July 31 – many dangerous proposals such as mandated sick leave and a ban on chemicals remain in the pipeline. But the headline for employers for 2011 appears to be “so far, so good.”

Highlights of the legislative session include:

• The Legislature enacted, and Governor Patrick signed, a Fiscal Year 2012 state budget designed to close a $1.9 billion deficit without new taxes. Massachusetts will end 2011 with a reserve fund of $1.3 billion and earned a ratings upgrade from Standard & Poor’s.
• Lawmakers left in place the scheduled decline in corporate tax rates to 8 percent on January 1, 2012.
• The Legislature in February approved an Unemployment Insurance rate freeze that limited the average UI tax increase for Massachusetts employers to $61 per employee and kept more than $400 million in the private sector. The measure averted an average 40 percent jump in UI taxes that was set to hit employers after rates automatically increased from Schedule E to Schedule G.
• Lawmakers gave cities and towns the ability to control soaring health insurance costs by changing the design of employee health coverage. AIM strongly supported the measure, reflecting the concerns of employers that spiraling health costs threaten the ability of cities and towns to provide the educational, safety and public works services that businesses need.
• The employer-funded Massachusetts Workforce Training Program was placed into a trust that will remove the program from the uncertainties of annual budget deliberations. The flagship program through which Massachusetts improves the skills of workers has provided $193.2 million in grants since its inception to some 2,500 Massachusetts employers to train 277,351 people.
• The Legislature required the commonwealth to post regulatory cost-benefit studies online, a move that AIM believes will foster meaningful debate about the costs and potential consequences of rules that may harm the Massachusetts economy.
• The 2012 budget included three tax reforms designed to strengthen the state’s business climate and enhance fairness and predictability for taxpayers: speeding tax audits, establishing equal rules for taxpayers and the Department of Revenue and providing early notification of changes in tax policy.

So what lies ahead for 2012?

• Health care cost containment
• Electricity cost reduction
• Unemployment Insurance reform and rate freeze (rates will automatically increase by 40 percent January 1)
• Fix the independent contractor law
• Allow for bi-monthly payment of wages instead of the current requirement for every two weeks
• Personnel records statute fix
• Defend non-compete agreements
• Monitor the state tax expenditure commission
• Continue to oppose the “Safer Alternatives” chemical ban bill
• Oppose Mandatory paid sick days