Healey: Tax-Relief Plan will Make Massachusetts More Competitive

Boston Globe – Can a governor make a state’s economy more competitive?

Governor Maura Healey sure thinks so. And she made that case to a packed room of Greater Boston Chamber of Commerce members on Thursday, the day after she filed her first state budget proposal and a tax reform package with the Legislature.

Healey’s tax plan, when fully implemented, will cost the state about $1 billion a year. Roughly 40 percent will cover a reduction in the state’s short-term capital gains tax and as well as broader estate tax exemptions. The business community has pushed for both proposals, and cheered their inclusion in her tax plan. But many business leaders say more needs to be done, particularly with the arrival this year of the so-called millionaires tax on high earners and the domestic out-migration of more than 100,000 people since the start of the COVID-19 pandemic

Healey argued that state lawmakers should change the short-term capital gains and estate taxes because Massachusetts is such an outlier on both fronts.

Her plan would reduce the tax rate on investments held for less than a year from 12 percent to 5 percent, bringing it in line with the state’s taxes on long-term capital gains and personal income. Only two other states, Healey told the chamber, tax short-term gains at a higher rate than long-term gains. Meanwhile, she would offer a credit that would essentially raise the threshold for the estate tax from $1 million to $3 million; she noted only one other state has such a low threshold, and most states have no estate tax at all.

Job Market Remains out of Whack

Washington Post – Speaking to Bloomberg on Thursday, Commerce Secretary Gina Raimondo summarized the central challenge businesses are facing in three words: “workforce, workforce, workforce.”

“We can’t hire enough, we can’t hire fast enough, we can’t hire people with the skills we need,” she said, paraphrasing what she’s been hearing.

Over the past year, there has been an average of 1.8 open jobs for every person looking for work. The relationship between jobs and workers was inverted briefly before the pandemic but not to the extent that it is now.

Taxes Running $1 Billion Over Benchmark

State House News – Through the first eight months of Fiscal Year 2023, tax collections of $23.6 billion are running 0.2 percent behind the record fiscal 2022 haul but are outpacing the state’s benchmarks by about $1 billion, or 4.4 percent.

Tax revenues in February of $1.98 billion exceeded benchmark levels, continuing the trend that has held for much of this fiscal year. Collections last month were up 9 percent above February 2022, and 2.5 percent over benchmark, the Department of Revenue reported late Friday.

After adjusting for an elective pass-through entity excise tax, year-to-date collections are $1.058 billion or 4.7 percent more than collections in the same period of fiscal 2022 and $572 million or 2.5 percent higher than the year-to-date benchmark.

Fiscal 2022 tax collections soared over the previous fiscal year, triggering nearly $3 billion in tax returns and leaving Beacon Hill with a substantially expanded tax revenue base from which to begin fiscal 2024 budget deliberations.

Income withholding taxes of $10.9 billion are up 3.6 percent so far this fiscal year and sales and use taxes of $6.3 billion, another big revenue base for the state budget, are up 8.8 percent compared to the same eight-month period in fiscal 2022. Corporate and business taxes of $2.16 billion are up 0.5 percent, and non-withheld income tax collections of $2.34 billion are down just over 27 percent so far this fiscal year.

“February collections increased in withholding, sales and use tax, and ‘all other tax’ in comparison to February 2022,” Commissioner Geoffrey Snyder said in a statement. “These increases were partially offset by decreases in non-withholding income tax. The increase in withholding is likely related to labor market conditions and the increase in sales and use tax reflects, in part, continued strength in retail sales. The increase in ‘all other tax’ is primarily attributable to estate tax, a tax category that tends to fluctuate.”

Businesses More Optimistic In February, But Still Grappling With Unknowns

A two-month slide in business confidence came to an end in February, but Bay State employers are largely in wait-and-see mode as they try to discern what track the economy will take in 2023, according to the latest readout from Associated Industries of Massachusetts.

AIM’s Business Confidence Index gained 0.3 points last month to rise to 53.5 on the zero-to-100 scale. February’s confidence level sat 3.2 points lower than a year prior. Since tumbling nearly 5 full points in December, there has not been significant movement in the index.

AIM said that sentiments among the businesses that responded to its survey are “driven by a swirl of often contradictory economic signals” and that companies are still trying to figure out whether a recession, persistently high inflation, labor shortages or economic growth will be the trend for 2023.

“Leading indicators suggest that economic growth will decelerate during 2023, yet the state and national economies continue to exhibit a strong labor market, low unemployment, and a persistently high rate of inflation,” the organization said.

Employers felt better in February about the Massachusetts economy than about the national economy. The Massachusetts Index gained 3.2 points last month to climb to 53.4, but it remains 4.3 points below last February’s mark. At the same time, the US Index remained in pessimistic territory for a fifth straight month with a reading of 47.1 despite gaining 0.4 points in February.

AIM also flagged a shift in its Manufacturing Index: while confidence among non-manufacturing companies rose to 56.1 in February, the outlook for manufacturing slumped 1.3 points and landed in the pessimistic range at 49.5.

“Consumer spending remains strong nationally and the job market is still historically tight — Massachusetts payroll employment grew at an annual rate of 4.2 percent in the fourth quarter,” Katherine Kiel, professor of economics at the College of the Holy Cross, said. “At the same time, the fact that confidence among Massachusetts manufacturing companies has fallen into pessimistic territory is a matter of concern.”

Healey Plan Divides Oversight Of Development Projects

Gov. Maura Healey wants to separate housing and economic development in the state’s bureaucracy, mostly to give housing production the enhanced focus she says it desperately needs. But Healey doesn’t want to completely shatter the connection between the two topics.

According to the details of a government reorganization bill she filed last week, Healey wants oversight of public and private community redevelopment corporations and their projects to be divided between the new Executive Office of Housing and Livable Communities, which is supposed assume all the powers and responsibilities of the existing Department of Housing and Community Development, and the new Executive Office of Economic Development.

Oversight responsibility will be exercised by the Executive Office of Housing and Livable Communities for projects exclusively or primarily focused on housing development, according to a March 1 letter Healey wrote with her bill, and by the Executive Office of Economic Development for projects primarily or exclusively focused on commercial development.

Healey says her bill also duplicates the current legislative authorization for MassWorks, a popular infrastructure grant program, in a new “HousingWorks” statute “dedicated exclusively to funding municipal infrastructure that supports new or redeveloped housing.” That change, Healey said, will ensure that officials in the new housing secretariat can make use of the grants currently provided to municipalities “pursuing smart housing growth policies.”

The bill also “includes some provisions that update and streamline the organization and administration of agencies” currently under the Executive Office of Economic Development, including the Massachusetts Office of Business Development.

In her filing letter, Healey describes a “housing crisis” in Massachusetts that she says “has been in the making for decades” and contributes to a high cost of living that “places Massachusetts at a significant disadvantage as we compete with peer states to attract and retain businesses.”

Cracking that problem, in an environment where key housing decisions are made at the local level, remains the challenge facing Beacon Hill. “In short, we must create an adequate supply of housing for our young families, workers, and an aging population if we want to remain one of the best states in the nation to live and work,” Healey wrote. Warmer weather states in the south and west have in recent years drawn new residents in part due to lower cost of living metrics.

Care about Massachusetts Workers and their Kids? Provide Child Care

Boston Globe – In Boston, there have long been debates about who gets into Boston Latin. Is the school diverse enough? Does it privilege the wealthy?

And every time I read an article about Boston Latin’s admissions policy, I think: isn’t it a little late to be having this discussion?

Research shows that kids from well-resourced households are ahead of their low-income peers by kindergarten. Kathy Hirsh-Pasek, an expert on early childhood development at Temple University, has said that “dramatic” gaps can be visible by age three. So, yeah, leveling the playing field for 12-year-olds is going to be tough.

Which makes you wonder why we pay so much attention to the minutiae of school testing requirements, and so little attention to the fact that, if you’re a family having a baby in Massachusetts, our message is: “Congratulations! See you in five years!”

Leaders on Beacon Hill want 2023 to be a turning point. Legislation to aid both parents and child care providers might get signed into law, and Governor Healey’s proposed budget includes strong support for child care centers, which teetered on the brink (and frequently closed) during the pandemic.

But implementation will take years. It’s unclear what the funding will look like. Or how much you’ll have to earn to get any help.

Healey Still Pushing for $200 Million to Boost Microtech

Boston Globe – Gov. Maura Healey is angling to attract federal dollars to Massachusetts for microelectronics and other tech advancements, despite the House appearing to not share her urgency.

Healey announced on Thursday that the Northeast Microelectronics Coalition, through the support of her administration and MassTech Collaborative, submitted a proposal to the federal government to turn the region into a hub for microtechnology development.

The coalition, made up of more than 85 organizations across seven states, aims to build “a regional hub that will advance the microelectronics needs of the U.S. Department of Defense while spurring new jobs, workforce training opportunities and investment in the region’s advanced manufacturing and technology centers,” according to quasi-public agency MassTech.

The coalition submitted the proposal to the DoD’s “Microelectronics Commons” program, which uses funds from the recently passed CHIPS and Science Act to invigorate the country’s domestic semiconductor and microelectronics industry.

“Massachusetts is a leader on innovation, technology, and advanced manufacturing, and we’re proud to continue that legacy by submitting this proposal,” Healey said in a statement.

“This is a once in a generation opportunity to invest in cutting-edge sectors that will be key to our country’s national security and ensure Massachusetts companies have the resources and workforce they need to succeed. We’re thrilled to put forth this competitive proposal to bolster the industries keeping Massachusetts at the forefront of innovation.”

Senate Matches Healey’s Tech Funding Ask

State House News – Top Senate Democrats packed nearly $200 million more in borrowing into a House-approved spending bill, seeking to weave more matching funds for federal microelectronics grants into a measure responding to the emergency shelter crisis and a looming drop-off in food aid benefits.

The Senate Ways and Means Committee on Monday recommended a new draft (S 23) of a supplemental budget Gov. Maura Healey filed last month and teed it up for a vote Thursday.

Senators bumped up the bill’s bottom line to $366.7 million plus $814.3 million in bonds, an increase over the $353 million appropriation and $635 million in borrowing the House approved last week, and in the process moved to include all the money Healey sought to help Massachusetts compete for federal dollars newly available under the CHIPS and Science Act.

Both bills would deploy $130 million in state dollars to keep Supplemental Nutrition Assistance Program (SNAP) benefits at an elevated level for a few months now that the federal government has ended a pandemic-era expansion. They would also steer $65 million toward preventing a universal school meals program from running out of money before the school year ends and $85 million to expanding emergency assistance shelter capacity amid a surge in demand.

Senators bulked up their proposal by dipping back into a separate, $987 million “immediate needs” bond bill Healey filed in January to fund housing and economic development programs, some of which the House wove into its version of the bill.

The Senate redraft calls for $200 million in borrowing to provide state matching funds for competitive federal technology and innovation grants, including programs available under the CHIPS and Science Act. Healey sought that money in her bond bill and has continued to tout it as a top priority, describing it as a way to build on the state’s history of innovation.

Proposal Would Require Vendors to Donate Food That Would Otherwise Be Tossed

NBC Boston – Boston could soon be a leader in the fight against food insecurity, according to two city councilors who have proposed a food-recovery program.

The ordinance being proposed by Boston City Councilors Gabriela Coletta and Ricardo Arroyo would require food that vendors would otherwise throw away to be donated to nonprofits.

“I’ve personally seen hundreds of people in my district in East Boston and in Charlestown waiting for hours in the cold to obtain boxes or bags of food in order to feed their families for the week,” Coletta explained.

Arroyo, the other co-author of the proposed ordinance, said he and Coletta spent the last 18 months on the plan.

“We think that there’s a good percentage of good, edible food that’s being lost in that process that could go to feed hungry people in the city,” said Arroyo. “Food insecurity is possibly one of the largest amounts of phone calls that we get. People looking for access to food, people looking for access to programs that have food.”

The proposal will be heard for the first time on the floor of Wednesday’s meeting of the Boston City Council.

Threading the Needle to Keep Clothing Manufacturing Alive in Massachusetts

Boston Globe – In the second floor of an old red brick mill building in Lawrence, about two dozen workers are hunched over sewing machines or operating other equipment used in the business of making men’s dress pants.

They come from China, Vietnam, Colombia, Mexico, Guatemala, the Dominican Republic, and Puerto Rico, and there are more women than men. It takes 65 to 70 minutes to produce one pair of pants, and 74 steps from beginning to end. Each worker performs two or three of those steps.

Working a shift that runs from 7:30 a.m. to 4 p.m., these workers produce 600 to 700 pairs per week, and around 35,000 a year, most of which are sold to the US military. The pay is $15 to $17.25 per hour. Because this business, which operates under the name Southwick Social Ventures, is a co-op, there is also an opportunity for ownership. After six months of employment, each employee can buy one share.

“We believe in manufacturing,” CEO May Tan told me after my recent visit to this factory. “We know it can work here.”

That leap of faith is inspired by a desire to make right what happened next door in Haverhill, where Brooks Brothers owned and operated the Southwick Clothing factory. In May 2020, at the height of the COVID-19 pandemic, when workers were producing masks and other personal protective equipment in a desperate effort to keep their jobs, the company announced it would be shutting Southwick Clothing down. That July, Brooks Brothers filed for bankruptcy.

Just like that, Haverhill’s biggest private employer disappeared. And just like that, so did the manufacturing jobs of more than 400 people who worked there. Tan was in charge of laying them off. Her official title was chief financial officer. But her nickname was “Chainsaw May.” When factory workers saw her come out of her office, Tan says, “they knew something bad” was about to happen.

Northern Berkshire Cultural Council Awards 93 Grants

Berkshire Eagle – State Rep. John Barrett III and Cecilia Hirsch, chair of the Cultural Council of Northern Berkshire, have announced the award of 93 grants, which exceeded the amount of the 2023 allocation of $86,500 funding cultural programs in Northern Berkshire communities.

A complete list of recipients, programs and grant amounts can be found at tinyurl.com/y9nvn7f6.

CCNB represents Adams, Cheshire, Clarksburg, Florida, Hancock, Lanesborough, Monroe, New Ashford, North Adams, Savoy, and Williamstown.

Applications and more information about the Local Cultural Council program are available online at mass-culture.org. Applications are due in mid-October.’

As Wu Battles Opposition on Rent Control, City Council Signals It’s Open to Compromise

Boston Globe – Outside City Hall, there is no shortage of opposition to Mayor Michelle Wu’s rent control proposal. But on the Boston City Council, at least, the reception may be warming.

This week, several councilors from across the body’s ideological spectrum either outright supported or sounded more open to Wu’s proposal, which would tie permissible rent increases to the health of the economy, with a cap of 10 percent in high inflation years.

While many councilors have yet to take public positions on Wu’s plan, and the body could still amend or reject it, supporters are growing increasingly optimistic that the council will approve rent control decisively.

Health Care

MassHealth Rolls Set to Shrink by 300,000, Healey Estimates

Boston Herald – Approximately a third of the state’s population is about to have to re-enroll in MassHealth, a massive undertaking that state officials project will ultimately remove approximately 300,000 people from state-sponsored health insurance.

As of February, approximately 2.3 million people were enrolled in the state’s Medicaid program, a 25 percent increase from before the pandemic. The increase has come not only as an influx of people lost their jobs and health insurance early in the pandemic but also because under federal rules, the state has not reassessed people’s eligibility to remain on the program for three years.

As the federal government puts COVID in the rear-view mirror, the normal annual eligibility process will resume starting in April, requiring millions of state residents to take action to retain their health insurance over the next 12 months.

Governor Maura Healey unveiled the projections in a fiscal 2024 budget proposal on Wednesday, detailing that, due to the redetermination effort, the state expects to spend $19.8 billion on MassHealth, nearly $2 billion less than this year.

“We know what we’re facing right now this spring with redetermination. We know the work that we need to do, and I know the team is very focused on that . . . so that we have a smooth transition as possible,” Healey said at a press conference announcing the budget proposal. “I think [the 300,000 number] reflects our best-educated estimate of what is necessary and appropriate to meet this moment and the needs of folks who have been accessing MassHealth.”

Eli Lilly Cuts Insulin Prices, Caps Out-of-Pocket Costs at $35

Boston Herald – People with diabetes who pay thousands of dollars for life-saving insulin each year will be able to keep more money in their wallet after Eli Lilly on Wednesday said it will cut insulin prices and cap out-of-pocket costs at $35 a month, or $420 a year.

This move from the largest insulin manufacturer in the U.S. comes after the federal government recently capped the cost of insulin for seniors on Medicare at $35 per month.

“For far too long, American families have been crushed by drug costs many times higher than what people in other countries are charged for the same prescriptions,” President Biden said in a statement following Eli Lilly’s announcement. “Insulin costs less than $10 to make, but Americans are sometimes forced to pay over $300 for it. It’s flat wrong.”

Biden last year signed the law to cap insulin at $35 for seniors, and he called on pharma companies to bring prices down for everyone on their own.

“Today, Eli Lilly did that,” the president said. “It’s a big deal, and it’s time for other manufacturers to follow.”

Eli Lilly is slashing prices by 70% for its most commonly prescribed insulins and is expanding its Insulin Value Program that caps patient out-of-pocket costs at $35 or less per month.

“While the current healthcare system provides access to insulin for most people with diabetes, it still does not provide affordable insulin for everyone and that needs to change,” said David Ricks, Eli Lilly’s chair and CEO. “The aggressive price cuts we’re announcing today should make a real difference for Americans with diabetes.”

Last week, U.S. Sen. Ed Markey visited Boston’s Codman Square Health Center to tout the cap on insulin costs as part of the Inflation Reduction Act, and he called for affordable insulin for all.

“Eli Lilly’s cost cap shows us that pharma can sell vital medicines at an affordable price,” Markey tweeted. “This fight isn’t over.”

Budget and Taxation

How the Governor Wants to spend Income Surtax Money

Boston.com – Massachusetts stands to benefit from a $1 billion windfall generated by the so-called “millionaires tax” for the first time this coming fiscal year, and Gov. Maura Healey is proposing a near-even split of the revenue between investments in education and transportation.

In her first budget proposal as governor, Healey is earmarking $510 million for education and child care initiatives and another $490 million to be spent on public transit and transportation infrastructure. The cash comes exclusively from funds generated by the Fair Share Amendment approved by voters last November.

Healey envisions the lion’s share of education funding will go toward higher education — some $360 million — with $140 million reserved for capital projects, $93 million for financial aid expansion, and $18 million for UMass and state university equity and inclusion programs.

Another $140 million in early education and care initiatives would open up more child-care opportunities and better position the state to bring in universal pre-K programs, she said.

A majority of transportation funding, meanwhile, would be funneled to the MBTA, with $186 million proposed to advance capital projects and an additional $5 million to launch a means-tested fare system for thousands of low-income riders.

Pandemic-Era Funding is Ending, and Massachusetts Wants to Build an Off-Ramp

Boston Globe – During the COVID-19 emergency, the federal government sent Massachusetts an unprecedented amount of aid to help residents navigate the pandemic’s darkest times, with money going to help cover rent payments, keep child-care centers open, and buy groceries.

But that federal aid is drying up and temporary policies are expiring, leaving Massachusetts and other states grappling with whether, or how, to keep some pandemic-era programs alive.

Those decisions are taking place as lawmakers begin to craft spending plans for the coming fiscal year. Governor Maura Healey is seeking at least $800 million in state funds — split between two separate spending proposals — to either plug funding shortfalls or extend programs that relied on federal pandemic-era aid.

The predicament raises a difficult question: What role should state government play in picking up where the federal government left off? Answering it opens a host of issues for state policy makers, from weighing what they can reasonably pay for, to, morally, what they should.

“We need to be thinking critically about the things that the state should be doing — but also very mindful that there is a state-federal partnership,” said Doug Howgate, president of the Massachusetts Taxpayers Foundation, a business-backed budget watchdog. “It’s not feasible for us to say, ‘We’re going to do everything that the feds did.’ ”

In her $55.5 billion proposed state budget, Healey aims to cover at least some of the initiatives for which the federal government once footed the bill.

Her budget commits $475 million for so-called C3 grants for child care providers, effectively extending a program that was supported entirely with federal funds last fiscal year. A mix of state and federal resources funded the grants this year, and, under Healey’s plan, they would rely entirely on state funds next year.

Diversity, Equity and Inclusion

Black-Owned Businesses Find That Landing a Big Contract Can Be a Risky Proposition

Boston Globe – When Sweet Teez Bakery owner Teresa Maynard met with Whole Foods in May 2018, she was hoping the supermarket chain would order as many as 2,000 of her three-inch pies.

When company executives instead requested 48,000, she was floored. Up to that point, the largest order the Dorchester native had completed was 500 mini pies.

“I say yes to everything and I’ll figure it out afterwards,” said Maynard, whose business was less than two years old when the deal was made official in September.

Whole Foods expected to have the pies in its New England stores in time for Thanksgiving shoppers. To pull that off, Maynard figured she’d need $80,000, far more than she could get, especially on short notice.

It was a golden opportunity for Maynard to expand her burgeoning business and cement its credibility, but she knew that if anything went awry, her operation would likely tank.

“You want to go after bigger things, and the only way for you to really become a contender is to be able to execute some of these larger orders,” she said.

It’s a dilemma many business owners of color face, both because the opportunity for big contracts and the ability to obtain the capital required to finance them is in short supply. According to a 2021 Bank of America survey, 56 percent of Black entrepreneurs said lack of access to capital limits their growth.

Black Empowerment Council Holds First Meeting

NBC Boston – The 33-member Governor’s Advisory Council on Black Empowerment held its first closed-door meeting at the Statehouse on Monday.

The panel will offer Governor Maura Healey guidance on issues related to the economic prosperity and wellbeing of the Black community, including education, health care, housing and workforce development.

Healey said the state’s Black residents make tremendous contributions to the state, but too often face systemic barriers that hold them back.

She said the council will help advise her on what “policies and levers that we can use within our administration to address issues of racial disparities which through COVID in particular were only exacerbated.”

“As someone who was a civil rights lawyer, this is something that’s near and dear to me,” she said at a Statehouse news conference.

Sustainability and Climate

New Regional Emergency Management Program to Focus on Climate

Boston Globe – From floods and blizzards to extreme temperatures and droughts, New England is increasingly experiencing climate-fueled disasters as the planet warms. Now, the six New England states have a plan to help emergency management professionals be prepared, with Massachusetts in the driver’s seat.

Governor Maura Healey announced a new training program Thursday morning that will provide education and expanded resources for Massachusetts, New Hampshire, Maine, Vermont, Connecticut, and Rhode Island.

Created by the six New England states and led by the Massachusetts Emergency Management Agency, the new Northeast Emergency Management Training Education Center will strengthen the region’s response to the climate crisis, Healey said in an e-mail statement.

“Today’s rapidly evolving threat landscape, driven in part by climate change, represents an immense challenge for the emergency management community,” she said. “When disaster strikes, emergency managers require the specialized knowledge and unique capabilities to adapt and respond effectively.”

The center will offer a variety of courses to all kinds of emergency management workers, including those in official state emergency management agencies as well as in related fields, such as public health and defense, in the public and private sector. Topics will range from how to manage an efficient emergency operation center — or response headquarters during an emergency — to how to manage an incident using FEMA protocols.

Employees of the Massachusetts Emergency Management Agency, which has more training staff than any other New England state, will teach the courses, though trainers from other states can also do so on a voluntary basis. For now, trainers will mostly administer courses they are already teaching in Massachusetts, but open them up to workers from other states. But soon, Massachusetts Emergency Management Agency acting director Dawn Brantley said she will embark on a needs assessment across all six states.

“We’re going to talk to emergency management professionals and find out from them what they would like to see us develop as a curriculum,” she said.

EV Startups Brace for Another Tough Year as Cash Dwindles

Wall street Journal – For many of the electric-vehicle startups, last year was rife with supply-chain constraints and manufacturing troubles that hindered their efforts to get off to a fast start.

Now, young companies such as Rivian Automotive Inc. RIVN 7.63%increase; green up pointing triangle

and Lucid Group Inc. LCID 4.81%increase; green up pointing triangle

are facing a more pressing challenge this year: They need to right their factory operations before running through their cash reserves.

The earnings results over the past few weeks for these EV makers illustrated the urgency of their predicament. While these companies are now producing vehicles, losses continue to mount as they have struggled to spool up assembly lines and boost sales as planned, whittling down their financial cushions and increasing the likelihood of needing to raise more money.

Rivian, once flush with capital after raising nearly $12 billion in an initial public offering in 2021, burned through $6.6 billion in cash last year. Analysts predict it could go through another roughly $6 billion based on projected expenses for this year.

Despite cost-cutting measures and efforts to increase output at its sole factory in Normal, Ill., executives are still anticipating a difficult year. Rivian forecast in February it would make 50,000 electric trucks, sport-utility vehicles and vans in 2023, well below Wall Street’s estimates and a figure that sent its stock down 18% the following day.

Lucid reported a drop in reservations in the last half of the year.Photo: Ash Ponders for The Wall Street JournalLucid, a maker of high-end electric sedans, also fell short on some fronts, reporting a drop in reservations in the last half of the year, to 28,000 at the end of December from 37,000 in June and setting an underwhelming production target for this year.

“Last year, our focus was on solving production bottlenecks,” Lucid Chief Executive Peter Rawlinson said. “Now in terms of sales, that’s my focus right now.”

a California-based EV startup that went public in 2020 through a reverse-merger deal, had a more upbeat earnings report, telling investors it plans to deliver its first model—the electric Ocean SUV—in the coming months. The company’s shares surged 30% following the February earnings announcement.

Still, Fisker faces a tight timeline to hit its full-year production target and has little leeway for error. The company reported it had $736 million in cash at the end of 2022 and said it expected expenses to total up to $610 million this year.

The landscape for these startups has dramatically shifted from when they initially went public in 2020 and 2021.

Investor zeal for companies promising to reshape the car business was running high then, and the financial markets were pouring cash into the EV space, hoping to find the next Tesla Inc. These aspiring auto manufacturers raked in billions of dollars before they made or sold a single car.

In all, investors have plowed over $123 billion in these EV startups through public offerings, reverse-merger deals and other funding mechanisms in the past three years, according to Dealogic.

Within the past year, though, Wall Street’s patience for the startups’ manufacturing woes has started to evaporate.

Inside Rivian and Ford’s Plants, as They Race to Build EVs FasterPlay video: Inside Rivian and Ford’s Plants, as They Race to Build EVs Faster

Rivian is under pressure to prove it can build its electric trucks at scale without having ramped up production before, as competition heats up from legacy auto makers. WSJ toured Rivian’s and Ford’s EV factories to see how they are pushing to meet demand. Illustration: Adam Falk

Some EV startups such as Lordstown Motors Corp., RIDE 5.66%increase; green up pointing triangle

already hit cash problems forcing them to delay vehicles and scale back their ambitions.

Others, such as Polestar Automotive Holding UK PLC, PSNY -2.24%decrease; red down pointing triangle

have posted better sales and a slimmer net loss than expected. The Swedish startup expects sales volume to increase by 60% this year to 80,000 units and recently raised $1.6 billion, which executives say is sufficient to fund operations this year.

Meanwhile, the strong car demand that helped push up vehicle prices across the board over the past few years is starting to weaken. Some EV makers have already adjusted prices down or are offering discounts.

Analysts say the need for raising capital could grow as these startups struggle with the costs of scaling their business and as capital markets are tightening.

Rivian’s stock is down about 80% from its IPO price, after it cut its production target in half last year and still narrowly missed the 25,000-goal by about 700 vehicles, due to missing parts.

This year, Rivian is planning more downtime at its factory to reorganize the line to produce more cars. It has already had two rounds of layoffs and delayed key projects, such as its next generation of vehicles, to preserve cash. Executives say supply-chain constraints, particularly on semiconductors, will continue to dent its production numbers this year, but it has enough cash to last until 2025.

Lucid recently raised $1.5 billion in funding from a share sale and had a total of $1.74 billion in cash and cash equivalents at the end of December—enough to last until the first quarter of 2024, executives say. The Newark, Calif.-based startup offered a cautious view on the year, though, and raised concerns about consumer demand.

Fisker said it had sufficient cash to launch its first vehicle, the Ocean, but said it was also examining raising more funds from lenders.

The auto industry has long been a capital-intensive business difficult for newcomers to penetrate. Tesla posted losses for years, while it struggled to build manufacturing scale, and relied on regular cash injections to stay afloat.

“The hard part is building the cars and the entire supply chain that goes with the cars,” Tesla Chief Executive Elon Musk said Wednesday. “This is a logistics challenge of extraordinary difficulty.”

In many ways, this new crop of EV startups faces a more difficult path. Tesla had few rivals for its cars when it launched the Model S over a decade ago, said Doug Betts, president of the automotive division at data-analytics company J.D. Power.

Now, these startups are also going up against more traditional car companies that have established supply chains and massive manufacturing operations. Competition is also getting fierce on the luxury end of the EV market, which is where these young companies are trying to target customers, analysts say.

“They have to beat BMW and Mercedes, who all have EVs now,” Mr. Betts said.

Ban Bill Aims To Slow Spread Of PFAS Damage

What’s the first step in dealing with an overflowing bathtub?

That’s the question MASSPIRG legislative director Deirdre Cummings asks to make her pitch for a sweeping new bill aimed at wrangling the presence of PFAS chemicals in food packaging, car seats, cookware, firefighting foam, carpeting and more.

“You don’t start by bailing out the water, right? You want to turn the tap off, stop it from getting worse,” Cummings said. “That’s the most important thing that this bill does.”

A host of environmental and consumer protection groups including MASSPIRG, the Environmental League of Massachusetts and Massachusetts Sierra Club are lined up behind legislation that would take a two-pronged approach to PFAS, or perfluoroalkyl and polyfluoroalkyl substances: ban their use in most products to prevent new contamination, and create new programs to clean up contamination that already exists.

The bill (HD 3324 / SD 2053), filed by Rep. Kate Hogan of Stow and Sen. Julian Cyr of Truro, would implement many of the 30 recommendations made last year by an interagency task force the lawmakers chaired.

“This really hits everything,” Hogan said about her bill’s embrace of the task force report.

PFAS chemicals have emerged in recent years as a growing public health and environmental concern since they do not fully degrade and have been linked to serious health effects such as kidney cancer and thyroid disease.

With presence in so many types of products, the chemicals have been detected all over the place. Citing Department of Environmental Protection data, MASSPIRG said samples from at least 169 public water systems in 95 Massachusetts cities and towns demonstrated PFAS contamination levels above the state’s maximum legal limit.

Massachusetts Sierra Club Chapter Director Deb Pasternak declared that her group “considers PFAS to be the greatest toxic threat we face today.”

“PFAS are present in so many items. It is a class of chemicals that have been used to make products greaseproof, stainproof, waterproof, shimmery for makeup,” Cummings said. “It’s used in so many areas, in food packaging and cookware and clothing. It’s everywhere, and the nature of these compounds are that they don’t break down in the environment, meaning they will continue to bioaccumulate. What is 10 parts of PFAS today will continue to climb unless you remove the source.”

The bill would implement bans on many products made with PFAS chemicals, even as some manufacturers move away from the substances, and require sellers to inform customers if PFAS chemicals are present.

Firefighter protective gear, food packaging, children’s products, cookware, rugs and carpets, upholstered furniture, personal care products and fabric treatments with intentionally added PFAS chemicals could not be sold after Jan. 1, 2026.

In 2030, the ban would extend to effectively any product to which the substances are intentionally added unless state regulators determine the use of PFAS is “currently unavoidable” and give a maximum exemption of three years.

Some products would need to be tested for unintentionally added PFAS starting in 2030.

“If we don’t prevent it, all we’re doing is identifying and cleaning up as if it wasn’t the dangerous contaminant that it is,” Hogan said. “I believe that by making prevention as important as identification and cleanup, we really are both saving ourselves, our health and also money in the future because we’re letting those that manufacture consumer products and food packaging know that we’re serious about this.”

The bill would also direct the DEP to amend surface water and groundwater discharge permits to require PFAS monitoring, and also call on regulators to update private well guidelines to help tackle the presence of the chemicals in drinking water from those sources.

Another provision would create a PFAS Remediation Trust Fund that would steer grant dollars to municipalities and water systems to help clean up contamination in drinking water, groundwater and soil.

Hogan said the legislation is “trying to set up the foundation” for the trust fund, adding that lawmakers would likely need to invest in it via bonding or future spending bills.

The environmental groups supporting the bill said if lawmakers act soon, Massachusetts would become the first state in the nation to ban PFAS chemicals in cookware and the second to ban it in all products by 2030.

“This is one of the most profound bills, I think, as far as affecting public health and toxics in particular that I’ve seen in a long time,” Cummings said. “This is attempting to deal with a problem that has been growing and contaminating and polluting our environment for more than 50 or 60 years.”

The measure already has substantial support beyond environmental and consumer protection groups. Seventy-one of the Legislature’s 200 lawmakers cosponsored one or both versions of the bill.

Both Hogan, who serves as speaker pro tempore, and Cyr, the Senate’s assistant majority whip, hold leadership positions in each chamber, which could provide a boost to the legislation’s chances.

Authors and advocates are also optimistic they will find an ally in the corner office. During her prior tenure as attorney general, Gov. Maura Healey joined with colleagues from around the country urging Congress to rein in PFAS chemicals and suing manufacturers of firefighting foam containing the substances.

Last month, the governor described PFAS contamination as a “big problem” and said she expects to need federal help to manage the issue.

Education

Healey Budgets for Free Community College

Gazette Net – Governor Maura Healey made a campaign promise to cover the cost of community college for all Massachusetts residents aged 25 years old and older who have not yet earned a college degree or industry credential.

“We have an incredible opportunity before us to train the next generation of workers and increase opportunities for all,” said Healey, who outlined the program Wednesday morning during a stop at Bunker Hill Community College in Boston.

The program would offer students financial support to help cover the cost of tuition, fees, books and supplies as well as provide funding for career and support services, according to Healey.

The $20 million proposal, which Healey dubbed MassReconnect during her campaign last year, would also include investments in other education and workforce development programs and apprenticeship initiatives.