BOSTON — The chief executive of a solar energy company that closed a plant and laid off hundreds of workers in Massachusetts told lawmakers Tuesday that the firm had no plans to return the millions of dollars in incentives it previously received from the state.
Executives of Evergreen Solar and Fidelity Investments, which also recently announced plans to move hundreds of jobs out of the state, appeared at a hearing of the Senate Post Audit and Oversight Committee called to examine the state's corporate tax policies in light of the recent job cuts. Fidelity and other mutual fund companies have enjoyed a tax break in Massachusetts for the past 15 years.
Evergreen Solar had been awarded more than $20 million in grants and an additional $11 million in tax and lease incentives since 2008, according to Gov. Deval Patrick's administration. The incentives were part of the state's strategy to be a leader in the creation of so-called "green jobs."
In January, however, Evergreen announced it planned to shutter its solar panel factory in Devens, Mass., and eliminate 800 jobs. The company cited the severe economic downturn and far cheaper labor costs at its manufacturing facility in China.
While "terribly saddened" that the company was forced to close the Devens plant, Evergreen CEO Michael El-Hillow said no when asked if the company planned to return any money to the state.
"This was not a bad deal," for Massachusetts," El-Hillow said. "We negotiated a deal with the Commonwealth to provide a certain number of jobs over eight years. Over the first three years we have created 85 percent."
State Sen. Mark Montigny, chairman of the Post Audit Committee, told El-Hillow he respectfully disagreed.
"I think you should give back the money that went directly into the Devens plant," Montigny said.
The New Bedford Democrat added that he did not blame Evergreen for taking the money, saying Massachusetts had been a "sucker" for agreeing to the deal in the first place.
Later during the hearing, Secretary of Housing and Economic Development Gregory Bialecki testified the state was still intent on recouping at least some of the money given to Evergreen.
"Make no mistake — we are committed to recovering every cent the taxpayers are owed. We are actively engaged in negotiations with the company to that end," Bialecki said.
Ron O'Hanley, president of Fidelity Investments, faced questioning from the panel about his company's recent decision to close a facility in Marlborough, Mass., and move most of the 1,100 employees who work there to offices in Smithfield, R.I., and Merrimack, N.H. The mutual funds giant said the company had decided to consolidate its New England operations.
Since 1996, mutual fund companies with operations in Massachusetts have been taxed on a single-sales factor, meaning they pay taxes only on sales and not payroll and property. Companies were required to increase jobs by 25 percent over the first five years the law was in effect, but there was no job growth requirement beyond those initial five years.
O'Hanley said Boston-based Fidelity more than met those initial commitments and though it was forced to shed jobs when the economy soured, is still one of the state's largest private employers with about 7,300 positions.
Without the tax break, O'Hanley told the committee that Fidelity likely would not have anywhere near the number of jobs it currently has in Massachusetts, noting that many other states offer attractive incentives.
"Firms like Fidelity would have chosen to grow elsewhere," he said.
Montigny repeatedly expressed frustration that neither Fidelity nor the state could offer a dollar figure for how much the tax benefit had saved the company in this or past years. State Revenue Commissioner Navjeet Bal estimated that the entire mutual fund industry enjoyed a $136 million benefit in the current fiscal year, but said privacy laws prohibited her from releasing company-specific tax information.
"I want to keep Fidelity happy, but I don't want them shipping jobs out of the state while they are taking advantage of a generous tax break," Montigny told reporters during a break in the hearing on Tuesday.
While stopping short of calling for repeal of the tax break — the same break is enjoyed by manufacturers in Massachusetts — Montigny said the state should re-examine all current corporate incentives to make sure they are working and also rethink its strategy of targeting tax breaks at certain sectors of the economy.
"To simply throw out these flavor-of-the-month breaks because they are exciting and fun and it's a high-growth industry, no one should be surprised in the not too distant future the market changes and that's no longer the high-growth industry," he said.
The Fidelity and Evergreen executives appeared voluntarily before the committee, and Montigny said the hearing was not intended to be an "inquisition."