The Massachusetts Taxpayers Foundation, a policy research group, argued in a report released Friday that the Covid-19 pandemic underscored signs that the state's competitive edge was already waning. Tens of thousands of taxpayers were already fleeing the state every year, the report contends, but the pandemic reshaped how and where people work while highlighting the dire need for greater access to child care, housing, safe transportation and workforce development.

The bottom line: High costs pose a much bigger threat to Massachusetts now than they did before COVID-19 changed the way companies and their employees think about remote work. The Taxpayers Foundation report cites particular concerns with an outmigration of talent that is already underway, an exodus that the report links to the high cost of housing and other living expenses. The report seeks to puncture what it calls “a belief in Massachusetts exceptionalism,” that this state will always be home to the best and brightest.

Massachusetts is facing a perfect storm of circumstances which, if not addressed, threaten to undermine the state’s historic advantage in attracting and retaining both businesses and talent, and could ultimately jeopardize our economic edge over other states.

Several budget analysts, including the Massachusetts Taxpayers Foundation and the Center for State Policy Analysis at Tufts University, have suggested the state could afford both tax break initiatives.

Legislative leaders have less than a week to reconcile the House and Senate’s differing $5 billion omnibus spending, tax and policy bills. This Bulletin identifies key fiscal and policy provisions to be negotiated by the Conference Committee tasked with reconciling the differences and makes recommendations to resolve major policy differences.

But as Ashley White, a researcher for the Massachusetts Taxpayers Foundation, said, "It struggles even to serve all of those families." White pointed to February data showing more than 16,000 income-eligible children on waitlists for care in Massachusetts.

In a mobile business world, where smart workers can now do their jobs remotely from anywhere, will some choose to relocate to a place where the living is easier and the housing more affordable? That, said Eileen McAnneny, the president of the Massachusetts Taxpayers Foundation, is a real worry. The mantra for business is “go where the talent is. . . . If we don’t have the talent, then we do run a risk,” she said.

“It won’t be the last headline that we read in that regard,” Massachusetts Taxpayers Foundation President Eileen McAnneny said after the host of a forum on the state budget read a breaking news alert about the company’s plans. Companies are “much more attuned to relative cost differences,” she said.

But erasing the gap is worth it for all of us. By one estimate, the racial wealth gap has cost the American economy $16 trillion over the last 20 years. Closer to home, the Massachusetts Taxpayers Foundation estimated that closing racial wealth gaps in Massachusetts could raise the state GDP by $25 billion over the next five years.

Earlier today, Governor Baker filed a combination economic development and COVID recovery bill that includes $1.3 billion in capital authorization, $2.3 billion in direct spending of remaining federal ARPA funds and 137 policy sections. This Brief provides an initial summary of the provisions of the Administration’s proposal. MTF will weigh in with greater detail on the current state of ARPA spending in Massachusetts in a subsequent bulletin.