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Romney eyes tax cut for job creation

Turning his attention to job creation, Governor Mitt Romney yesterday proposed a tax cut for companies that create manufacturing jobs in biotechnology and medical devices, and called for beefed-up spending on training workers for the new economy.

The governor said he will file an economic development bill that will also include incentives for businesses that redevelop polluted sites and new ideas to prod cities and towns into building more housing. Romney said his $125-million, three-year plan would make Massachusetts a friendlier place for businesses and add "thousands and tens of thousands" of jobs.

"I don't think these are all the world's best ideas, but they're some of them," Romney said at a news conference on the State House lawn, with about 40 business leaders on risers behind him. "They're ideas that I believe will make a real difference in creating great new jobs in Massachusetts."

The governor's package was praised by members of the business community, who wanted him to get more involved, but greeted with skepticism by Beacon Hill Democrats, many of whom support a competing proposal by House Speaker Thomas M. Finneran that would give more direct grants to companies that create jobs. State senators held a hearing on Finneran's $110 million proposal yesterday, and are working on their own bill.

Legislative leaders were particularly reluctant to embrace Romney's call to grant tax rebates to firms that add new manufacturing jobs. Senate Ways and Means chairwoman Therese Murray said she believes targeted tax cuts generally don't help create jobs.

Representative Peter J. Larkin, assistant vice chairman of the House Ways and Means Committee, said giving money to companies after they create jobs will cost the state money needed for other services, and may not help businesses when they need an edge.

"Waiting for the recovery and then back-filling with a credit may be too little, too late," said Larkin, a Pittsfield Democrat. He also criticized Romney's plan for rewarding expanding biotech companies while offering little or no help to more established businesses and companies in other tech-related fields.

The state's unemployment rate stood at 5.4 percent in July. That's up from 5.2 percent in January, when Romney took office, according to the state Division of Employment and Training.

The preparation of a jobs bill marks a strategic shift in Romney's approach to economic development, after he came under criticism from business leaders and economists for not doing more to help companies grow. Until now, most of Romney's jobs efforts were more symbolic than substantive, and Romney told the Globe last month that he didn't feel an omnibus jobs bill was necessary.

But yesterday's event seemed designed to portray the governor as attacking the problem of job creation with concrete legislative proposals. The governor briefed business leaders on his plans in the morning and asked for their input in crafting a sprawling piece of legislation; he met with newspaper columnists and editorial writers in the afternoon to tout his plans. Top lawmakers were also briefed before yesterday's announcement.

"What we've been asking for is a comprehensive, tech-based development plan, so I'm very happy with what he's proposing," said Christopher R. Anderson, president of the Massachusetts High Technology Council, who had called on the governor to do more to help businesses. "We needed action to match the words, and he's proposed action."

Romney would give tax rebates to businesses that add 25 or more manufacturing jobs in the biotechnology, life science, and medical device industries. Those companies would get back half of the income taxes paid by the new employees, with an estimated cost to the state of $10 million over three years.

Henri Termeer, CEO of Cambridge-based Genzyme Corp., said Romney's approach will take advantage of the coming explosion in biotechnology manufacturing. Years of research, much of it in the Boston area, is beginning to result in products and Massachusetts should make itself a more attractive location for manufacturing, he said.

"It's an initiative that reduces some pressure during the early days of building up these facilities," Termeer said.

In their scope and broad goals, the plans put forward by Romney and the House are roughly similar. Both seek to help technology companies as they look to grow in the coming years, providing a boost that many economists say will be key to the state's economic recovery.

But the House plan and Romney's proposal differ in some key specifics. The House would rely heavily on loans and grants, giving businesses quick help when they first expand here. Romney is targeting workforce training and housing costs and wants to reward businesses after they grow jobs, encouraging development a bit more indirectly.

The House proposal would spend $110 million from the state's settlement with the tobacco companies to provide help for businesses over an unspecified number of years. About $55 million would fund low-interest loans to high-tech firms; $40 million would pay for grants to businesses; $8 million would redevelop what are called brownfields, or land with mild levels of industrial pollution; $5 million would go to the Massachusetts Technology Development Corp.'s revolving loan fund; and $2 million would provide bridge loans for companies that have financing commitments, but are waiting for the money.

Romney's plan includes similar brownfields and bridge loans, and backs up Finneran's proposal that the investment tax credit be made permanent. It also includes housing elements not in the House plan, such as $9 million in tax rebates to communities that build more housing, and a proposal to encourage cities and towns to zone surplus state property for housing.

Romney also wants spend $57.8 million over three years on workforce training, funded via the $8.10-per-worker training tax that employers pay.

In addition, the governor is calling for matching grants to colleges and universities that receive federal research and development funding.

Some lawmakers questioned the timing of Romney's announcement, since his press conference coincided closely with legislative leaders' work on their proposals. Murray said she was surprised the governor made his announcement on the same morning that Senate lawmakers were having a hearing on the House jobs bill.

"I have no idea why it's happening at the same time," said Murray, a Plymouth Democrat. "I hope it's not one-upsmanship."

Raphael Lewis of the Globe staff and Globe correspondent Brendan McCarthy contributed to this report.

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