On opposite ends of the political spectrum, lawmakers agree on the need to end ‘corporate welfare’
“This shows that there is widespread concern about Rhode Island’s corporate welfare program and a broad desire to move beyond corporate welfare as an economic strategy,” Bell said.
Their proposal is inspired by the truce which Kansas and Missouri officials signed in 2019, ending a long border economic war that had cost hundreds of millions of dollars while creating few jobs.
Place said Rhode Island was in a similar situation, as a small geographic area wedged between Massachusetts and Connecticut. For example, General Electric was going to move its headquarters out of Connecticut “no matter what,” he said. “So why try to bribe them to move into our state?”
The unlikely duo got nowhere when they introduced the legislation last year.
But this year they quote a new analysis that the State Department of Revenue conducted on two of the state’s largest economic development incentive programs. The March 3 analysis of the Rebuild Rhode Island and Tax Increment Financing tax incentive programs concluded that the programs would result in “a net negative total impact on general state revenues over the years 2018 through 2035.”
Bell said it’s telling that an administration that favors the expansion of such programs concludes that they are not paying for themselves. “It’s not really a surprise,” he said of the analysis. “The track record of these programs is truly abysmal and Rhode Island should stop doing them.”
“They haven’t produced the revenue promised,” Place said, citing the analysis. Too often, he said, “companies just take the money because they’re not stupid.”
But Commerce Secretary Stefan Pryor defended the two tax incentive programs, saying they had “stimulated more than 50 projects in total, stimulated nearly $3 billion in total capital investment”.
“These projects visibly change the horizon of our state,” Pryor wrote in comments included in the analysis. “In addition, it is estimated that these projects have created or will create nearly 25,000 jobs, both in construction and in ongoing jobs. The Rebuild and TIF incentive programs have helped Rhode Island make significant economic progress.
Pryor also pointed out that the analysis was limited to two of the more than 50 projects.
“Furthermore, the analysis does not include all the fiscal flows generated by the projects and does not take into account all the jobs created by the projects,” he wrote. “As to the financial benefits of the programs, attempting to draw conclusions from such a preliminary analysis would be a premature endeavor and could lead to erroneous impressions of these programs.”
But Place and Bell released a joint statement, saying the state could save millions of dollars by repealing these types of tax breaks. “We believe the corporate gift system is a good start in our bipartisan call to create smart, thoughtful changes in the way we do business in the Ocean State,” they said. .
Place argued that money spent attracting businesses here would be better spent on businesses already in Rhode Island.
“People forget that every tax incentive is money we could give to our local businesses,” he said. “Why aren’t our mom and pop stores good enough to receive these kinds of incentives? It is an insult to the engines of our economy.
Place argued that there was no downside to the legislation because the “anti-poaching” provisions would only apply to other states that enter the pact.
The proposal states, “Where two or more states have adopted and signed the compact, the governments of the state parties, or any political subdivision, shall not make a grant to any private enterprise for the purpose of selectively supporting a specific industry or enterprise. , or induce a specific industry or business to move an existing facility from one State Party to another State Party or to open a new facility.
Bell said he thinks the legislation will eventually pass because it doesn’t have much opposition. But, he said, “this will require leadership changes, hopefully after the next election.”