Online sales tax eyes to shore up Mass. downtowns
Photo | Timothy Doyle
Downtown Fitchburg
Economic development officials, cultural sector advocates and others pitched lawmakers Monday on the idea of peeling off a portion of the state's sales tax revenue from online shopping to use as grant funding for organizations that work to make downtowns across Massachusetts more walkable, livable and engaging.
Downtown development has long been an important part of the state's economic development strategy and is taking on greater emphasis as the state looks to incentivize transit-oriented development near MBTA and commuter rail lines. The idea of using some of the state's online sales tax money to invigorate downtown development efforts was met with support Monday before the Joint Committee on Community Development and Small Businesses.
The bills (H 228 / S 130) filed by Rep. Antonio Cabral of New Bedford and Sen. John Cronin of Fitchburg would establish a Downtown Vitality Fund managed by the Executive Office of Economic Development. The fund would get 5 percent of the sales tax revenue generated by online retailers to be used for matching grants to support staffing and operations of business improvement districts, main street associations, state-designated cultural districts and parking benefit districts, especially in Gateway Cities and other low-income communities.
Catherine Feerick, the economic development director for Attleboro, said she wanted to point out to the committee "just how elegant" of a solution the bill presents.
"You're taking a source that has, for the last several decades, really detracted from our downtowns and our Main Streets, and you're using a source of funding coming from that detrimental impact and you're using it to try to heal some of the wounds," she said. "I really look forward to seeing where this legislation ends up because I think it could be, really, a model for other states."
Ben Forman, research director at MassINC, said he thinks this is the best time of year for the committee and Legislature to contemplate the "downtown vitality" bill and what it means.
"In the coming days, we're going to see a blizzard of online ads for holiday shopping. Every time we pick up our phone, we're going to be tempted to 'click here.' We'll certainly see lots of Black Friday advertising and promotion for the big box retailers, but our downtown districts, our commercial areas, where our local and small businesses operate, are going to be drowned out and all their efforts to get people to buy local, to build wealth and family businesses, are really struggling against a Goliath," he said. "We know how important it is from a local economic development perspective to have these locally-owned businesses occupying our ground floor retail spaces to make our downtowns vibrant places for people to live increasingly, near transit, as well as work."
Supporters said the legislation would help give a jolt to the state's cultural sector too.
"Much of the creative sector relies on the vibrancy of downtowns. And the broader economy benefits when we invest in arts and culture. When people attend shows and performances, they also shop, they go to restaurants and they spend locally," Cabral, the bill's chief House sponsor, said. "However, cultural districts lack a funding mechanism to promote local creative economies. This bill will create a funding mechanism to promote our historical areas, urban squares, town centers, and more."
Emily Ruddock, executive director of advocacy organization MASSCreative, pointed to a recent report from the Americans for the Arts that measured the economic impact of the average arts event in Springfield at $31 per attendee.
"For every person who goes to an arts event in downtown Springfield, they're spending $31 at neighboring retail and local dining. So for us, we see this bill as investing in a sure bet, right? We know when people come to our downtowns, they spend their money and the local economy is supported. But that takes work and that takes coordination," Ruddock said.
No one testified in opposition to the bills during Monday morning's hearing. And the idea, which supporters said had been favorably reported out of the committee as part of a larger legislative package last session, was met with support from House co-chair Rep. Paul McMurtry.
"I want to just acknowledge the small businesses of the commonwealth who are, some say, the lifeblood of our communities. I appreciate the work, especially as we emerged from some challenging times and the effects of the pandemic. I'm a small business owner myself for some 30-plus years and I'm grateful to those that do business here in the commonwealth that consider themselves small business that give back to the communities in so many different ways -- charity and job and just the, as I said, the fabric of the community," McMurtry, who owns the Dedham Community Theatre, said.
A few times during the hearing, McMurtry noted the level of support for the "downtown vitality" bills and added his own.
"Downtowns and small businesses are the fabric of communities and collectively the fabric of the commonwealth," he said after Cabral testified. "I hope we can continue to move this matter forward."
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