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Chafee Created Twice as Many RI Jobs in His Last 2 Years Than Raimondo in Her First 2 Years

Tuesday, January 24, 2017

 

Chafee more successful in job creation over the past four years.

Gina Raimondo’s goal as Governor has been to rebuild Rhode Island’s economy and create jobs. However, a GoLocal review of Raimondo’s performance shows that job creation has been virtually stagnant in her first two-years in office despite handing out tens of millions in taxpayer subsidies to a range of primarily out-of-state companies.

In contrast, Governor Lincoln Chafee, Raimondo’s predecessor, produced more than twice as many jobs in his last two years in office.

According to Rhode Island Department of Labor and Training data, Chafee created 13,436 jobs in his final twenty-four months while Raimondo has only created only 6,699 in the same time  — less than half of Chafee’s job creation.

Incentives Versus Changing the Business Environment

Chafee was adamantly opposed to giving out incentives as a recruitment tool. 

As the Tax Justice website reported, “Another notable reform Chafee enacted was the passage of a law requiring Rhode Island’s state analysts to evaluate the impact of the state’s economic development tax breaks. The issue was that Rhode Island, along with a host of other states, did not require any sort of analysis as to whether its costly economic development tax incentives actually produced results in terms of jobs and economic growth.

Chafee’s reluctance to do individual company deals was in part of an outgrowth of the failure of 38 Studios. 

As GoLocal reported about Chafee’s economic development strategy in 2011 (after 38 Studios was funded, but before it collapsed), “But (Spokesman Mike) Trainor said Chafee is not necessarily opposed to all tax credits for companies. What the Governor is most opposed to, he said, is “one-off deals” tailored to specific companies. Instead, Trainor said Chafee prefers a more “systemized approach.”

Wexford project - more than $32M for less than 100 jobs.

Meanwhile, the Raimondo administration has provided dozens of one-off company deals. As GoLocal recently revealed after weeks of investigation, the Raimondo administration deal that provides in excess of $32 million in funding and incentives to Wexford to build on the 195 land will create just 90 full-time jobs.

Other Raimondo deals are also lucrative. General Electric is in the process of bringing 100 technology jobs to Rhode Island and is receiving an estimated $5.2 million in incentives. Similarly, Johnson & Johnson has inked another tremendously lucrative jobs package.

Johnson & Johnson announced in December that they plan to bring 75 "high wage jobs" to Rhode Island by opening a new health technology center in Providence -- and with the incentives the company is being promised by the state, the deal will cost taxpayers $80,000 a job.

"They will be asking for approximately $6 million in incentives," said Commerce Secretary Stefan Pryor following the press conference at the Providence Public Library. "There will be a qualified jobs allocation as part of that in excess of $4M....there'll be allocations for talent incentives, and there'll be allocations for coverage of costs for the facility One Ship Street."

Gina Raimondo refused to respond to questions for this article.

 

Related Slideshow: Winners and Losers in Raimondo’s FY18 Budget Proposal

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Winner

Criminal Justice Reform

Per recommendations from the Justice Reinvestment Working Group, the Governor is proposing nearly $1 million in investments such as the public defender mental health program ($185,000), improved mental health services at the ACI ($410,000), recovery housing ($200,000) and domestic violence intervention, in her FY18 budget. 

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Winner

English Language Learners

Under the heading of “promoting 3rd grade reading,” Raimondo proposed adding $2.5 million to make English Language Learning (ELL) K-12 funding permanent.  The Governor’s office points out that RI is one of four states that doesn’t have permanent funding.

The suggestion was one made by the Funding Formula Working Group in January 2016, who said that “in the event that Rhode Island chooses to make an additional investment in ELLs, the funding should be calculated to be responsive to the number of ELLs in the system and based on reliable data, and include reasonable restrictions to ensure that the money is used to benefit ELLs — and promote the appropriate exiting of ELL students from services.”

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Winner

Car Owners - and Drivers

Governor Raimondo wants to reduce assessed motor vehicle values by 30% - a change that would reduce total car tax bills by about $58 million in calendar year 2018. Speaker of the House Nicholas Mattiello, however, has indicated that he might want to go further in its repeal.  

In her budget proposal, Raimondo also put forth adding 8 staffers to the the Department of Motor Vehicles to "address wait times."

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Winner

T.F. Green

The “Air Services Development Fund” would get an influx of $500,000 to “provide incentives to airlines interested in launching new routes or increasing service to T.F. Green Airport.” The Commerce Corporation set the criteria at the end of 2016 for how to grant money through the new (at the time $1.5 million fund).

Also getting a shot in the arm is the I-195 development fund, which would receive $10.1 million from debt-service savings to “resupply” the Fund to “catalyze development & attract anchor employers.”

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Tie

Minimum Wage Increase

An increase in the state minimum wage is part of Raimondo’s proposal, which would see it go from $9.60 an hour to $10.50 an hour.  Raimondo was unsuccessful in her effort in 2016 to bring it up to $10.10 — it was June 2015 that she signed legislation into law that last raised Rhode Island’s minimum wage, from $9 to 9.60.  

The state's minimum hourly wage has gone up from $6.75 in January 2004 to $7.75 in 2013, $8 in 2014, and $9 on Jan. 1, 2015.  Business groups such as the National Federation of Independent Business however have historically been against such measures, citing a hamper on job creation.  

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Tie

Cigarette Tax

Like the minimum wage, Raimondo is looking for an increase - in this instance, the cigarette tax, and revenue to state coffers.  Raimondo was unsuccessful in her effort to go from a tax of $3.75 to $4 last year. Now she is looking for an increase to $4.25 per pack, which the administration says would equate to $8.7 million in general revenue — and go in part towards outdoor recreation and smoking cessation programs.  

The National Federation of Independent Business and other trade groups have historically been against such an increase, saying it will hurt small businesses - i.e. convenience stores. And clearly, if you’re a smoker, you’re likely to place this squarely in the loser category instead. 

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Loser

Hospitals

As often happens in the state budget, winner one year, loser the next. As GoLocal reported in 2016, “the Rhode Island Hospital Association immediately lauded the budget following its introduction, and addressed that while it is facing some reductions, that it "applauds" this years budget after landing on the "loser" list last year.”

This year, it falls back on the loser list, with a Medicaid rate freeze to hospitals, nursing homes, providers, and payers — at FY 2017 levels, with a 1% rate cut come January 1, 2018. 

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Loser

Online Shoppers

The taxman cometh — maybe.  Raimondo proposed an “Internet Sales Tax Initiative” — which would purportedly equate to $34.7 million in revenues.

"Online sales and the fact that online sellers do not collect sales tax has created a structural problem for Rhode Island's budget — our sales taxes have been flat," said Director of Administration Michael DiBiase, of the tax that Amazon collects in 33 states, but not Rhode Island. "We think mostly due to online sales, we’re able to capture the growth. The revenue number is $35 million dollars — it improves our structural deficit problem. It’s an important fiscal development."

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Loser

Long Term Care Funding

The Governor’s proposal recommends “redesigning the nature” of the State’s Integrated Care Initiative, by transferring long-term stay nursing home members from Neighborhood Health to Medicaid Fee-for-Service and repurposing a portion of the anticipated savings (from reduced administrative payments to Neighborhood Health) for “enhanced services in the community.” “The investments in home- and community-based care will help achieve the goal of rebalancing the long-term care system," states the Administration. 

Cutting that program is tagged at saving $12.2 million; cuts and “restructuring” at Health and Human Services is slated to save $46.3 million. 

 
 

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