By Paul Moreno

NEWTON, Wednesday, December 9 -- A group of economic experts predicted a mild slowdown of the Massachusetts economy next year. 

At a forum assessing the condition of the Massachusetts economy sponsored by the Beacon Hill Institute, they agreed that the state will almost surely not repeat this year’s economic growth, but that it is better prepared than ever to face a general economic slowdown. 

Richard DeKaser, the senior economist at BankBoston, said that next year’s economic performance will be disappointing compared to 1998, but may not suffer an absolute decline.  The national and international problems of 1998 will continue in 1999 and will not be offset by this year’s growth in housing construction, consumer spending and business investment.  There are already signs of employment problems in the state, he said. 

Frederick Laskey, the state’s Secretary for Administration and Finance, sees signs of the economic slowdown in state revenue collections.  He noted that the state’s tax collections continue to grow, but the rate of growth has slowed.  He said that state revenues are a lagging indicator of economic performance. 

While there is very little the state can do to affect national and international economic forces, it has done a great deal to provide an environment more friendly to business, the secretary said.   It is no longer fair, he argued, to call the state “Taxachusetts,” as the Boston Herald did this week. 

The administration has cut taxes twenty-eight times, Mr. Laskey said, and has accumulated $1.2 billion in its “rainy day fund” and another $2 billion in its unemployment fund.  This will enable the state to avoid raising taxes sharply when more expenditures are needed. 

Some of the panelists and audience were skeptical of the government’s role promoting the economy, hinting that it was attempting to oversee a “managed economy” and noting that state tax collection is among the fastest-growing “businesses” in the state.  But Bruce Holbein of the Massachusetts Software Council argued that government policy has been at least benign, and often helpful, to business. 

The economists agreed that the state’s most serious problem is attracting and keeping high-skilled labor.  The public schools are not preparing young people for high-skill jobs and the state’s high cost of living is not attractive to skilled labor from other states. 

Michael Ruettgers, President of the EMC Corporation, a rapidly-growing technology company in Hopkinton, said that the state has helped lower the cost of living through tax relief, and that housing costs are not as much of a disadvantage in Massachusetts as they were in the 1970s and 1980s.  Mr. Laskey agreed that the state should not attempt to make housing more affordable through state subsidies, as it did in those decades. 

Mr. DeKaser argued that complaints about the high cost of living in Massachusetts are exaggerated, and that the benefits of government efforts – a cleaner Boston Harbor, cleaner ground water supply, and land conservation – had to be considered along with their costs. 

The conference was held the Newton Marriott Hotel. 
 

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