Worcester Business Journal

www.wbjournal.com March 16, 2015 • Worcester Business Journal 29 LONG FADE TO BLACK. A two-year-long phaseout of the state's film tax credit, which the Baker administration didn't believe was yielding adequate payback. The credit has its champions in the legislature, as well as the film industry, and is expected to be a key subject of debate when lawmakers begin their budget deliberations. ROADS AND RAILS. Increasing transportation spending by 20 percent, including $187 million, or a 53-percent jump, in direct aid to the MBTA, which demonstrated its need for more funding during last month's winter storms. Many businesses rely on a strong transportation infrastructure to get their employees to and from work, as well as moving goods and delivering services. The MBTA is broken pretty badly, and $187 million will not make a substantial difference. But that will have to wait until a long-term plan for the T emerges that can gain the buy-in of both Baker and the legislature. MORE CASH FOR COLLEGES. An average 3 percent increase for higher education, including the University of Massachusetts system, state universities and community colleges. As business calls for stronger alignment between course offerings and "job ready" skills, this increase demonstrates a forward-thinking perspective. MORE STEM MONEY. While it's a relatively small item, an extra $27,000 (to $1.5 million) in professional development money for math and science teachers to boost student scores in those subjects answers a top priority for industries that depend on those skills. BOOST FOR LOW-INCOME RESIDENTS. Doubling the state's Earned Income Tax Credit from 15 to 30 percent of the federal limit. The $38.1 billion budget plan keeps spending growth at around 3 percent while holding the line on taxes (keeping a promise the governor made in last year's campaign) and fees. The budget protects the commonwealth's "rainy day" fund — which sits at $1.1 million as of Feb. 28, down from $1.65 million in 2012 — for the first time in four budget cycles, according to Baker's budget chief, Kristen Lepore. But cuts are also necessary to help restrain spending growth, and the governor cited "bipartisan consensus" in his plan to curb spending on MassHealth, the health insurance program for low- and moderate-income Bay State residents. Yet at the same time, the budget seeks nearly $475 million more for women's health care, dental care for adults and services for autistic children. "In a large, healthy economy," Baker wrote in his budget message, "it is clear our issues are based on a need to prioritize spending and make state government more efficient." While some would argue that the commonwealth's budget must go on a more drastic diet, and others would argue for providing more financial incentives to certain industries, the governor's budget proposal provides a solid starting point to chart a course of priorities beginning in the 2016 fiscal year, which starts July 1. Further, Baker's previously announced 90-day freeze on new regulations sent a signal to the business community that economic growth is a high priority. Both sides of the political aisle would agree that loosening up unnecessary restrictions that can help business grow, while crafting a spending plan in support of it, can lay a foundation for future success. The governor's budget proposal provides a good starting point. n Baker's first budget helps chart course for more growth E D I T O R I A L The Worcester Business Journal welcomes letters to the editor and commentary submissions. Please send submissions to Rick Saia, editor, at rsaia@wbjournal.com. Letters can also be faxed to 508-755-8860. I n the end, Radio Shack didn't know its own identity. In what will most likely be a major case study in business schools, the once world-famous electronics chain has filed for Chapter 11 bankruptcy protection and will close most of its Central Massachusetts stores. Once noted for its do-it-yourself spunk, Radio Shack overextended its reach and forgot its roots. Sure, you could blame technology for its demise, but that's only part of the story. In its final years, the firm that was established in Boston was known more for a tacky, self- mocking stuck-in-the-1980s Super Bowl ad than its batteries, cellphones, alarm clocks and pocket radios. In the 1960s, my father and his cousin, the ultimate DIY duo, would travel from their always-in-renovation- mode triple-deckers in East Boston to the Radio Shack in Saugus. They were looking for wires, switches, extension cords, light fixtures, tools — anything that could help them build their American Dream. In those days, the ride up Route 1 was a field trip. But my father and his cousin were loyal Radio Shack customers. Many corporate marketing wizards today would like to capture that elusive "customer experience" of two immigrants walking into a store, enthralled at the wide array of gadgets and wires. Over its long run, Radio Shack had the good luck to ride the tech waves surging beneath it: 8-track tape machines, CB radios, the first commercial PC (the TRS-80) and, of course, the VCR. And still it was the place you could go for batteries. Radio Shack was even one of the first companies with loyalty cards for — what else — batteries. It's hard to believe today that, in the 1970s, as Bloomberg reminds us, the TRS-80 was more popular that Steve Jobs' twinkle-in-his-eye Apple IIs. Much of that had to do with the fact that Radio Shack had 3,000 storefronts from which to sell it. But the company's lack of vision and lack of ability to keep up with the torrent of hardware and software competition was an early stumble. Years later, Radio Shack bet big on cellphones, cutting deals with major providers. The idea worked at first, thanks to its wide reach (in every mall in the U.S.) But I wouldn't think of buying a wireless contract from a reseller I associated with other products. It never seemed like a good fit when I could deal with Verizon or Sprint. Today's major success stories are about expanding core offerings with other products. For example, Amazon is into robotics, film production and big data centers, and Google's stretch into driverless cars and wearable computers suggests it's not primarily a search engine company anymore. These firms thrive because they offer products you didn't know you needed. But the cores of their business models are still there. Radio Shack was the first stop for the hobbyist and entrepreneur tinkering for the next big thing. Today, it's in bankruptcy court. In this age of turbulence, it won't be the only company of such stature to see its lights go out. n Frank Conte is a policy analyst and manager for the State Competitiveness Project at the Beacon Hill Institute at Suffolk University, in Boston. Why we tuned out Radio Shack BY FRANK CONTE Special to the Worcester Business Journal V I E W P O I N T Frank Conte W hen a new governor takes office, the first budget offers a clear picture of the spending priorities and focal points of the new administration. In his first spending plan since he took office two months ago, Gov. Charlie Baker has charted a course that many in the business community would find appealing, while striking themes that will also play well with the Democratic- dominated legislature. Among them: Budget highlights Gov. Charlie Baker's $38.1 billion budget plan for fiscal year 2016 includes the following: • A $34 million increase (3.6 percent) in unrestricted local aid, to $980 million. • A phase-in of the Earned Income Tax Credit to 30 percent of the federal limit. • Increasing transportation spending by 20 percent, including $187 million, or a 53-percent increase, in direct aid to the MBTA. • An early retirement incentive program to help reduce the state's administrative spending. Source: Governor's office

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