Legislature, EDC War Over Reorganization - Millions Could Be Lost
Monday, November 25, 2013
WIth the effective date approaching for the new Commerce Corporation, questions are being raised as to what happens to existing federal contracts through the EDC.
Former state legislator and Congressional candidate John Loughlin on during his radio show on 630WPRO this past Saturday raised the issue that as of January 1, 2014, when all functions formerly administered by the department of Rhode Island Economic Development Corporation are transferred to the Rhode Island Commerce Corporation, the dissolution of the EDC takes with it its Federal Identification Numbers, which are necessary for the validity and operations of the millions of dollars in federal contracts associated.
Larry Berman, spokesman for Speaker Gordon Fox, provided the following statement to GoLocal.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"An EDC official contacted our office late last week to raise this issue for the first time after speaking to Go Local Providence. If the legislation that was enacted by the General Assembly in any way should impact the receipt of federal funds, such concerns can be addressed early in the new session which begins on January 7."
"A more appropriate time for the EDC to raise these concerns would have been during the public hearings that were held on the legislation several months ago. However, the EDC did not support the Assembly's much-needed reform efforts which will provide for better coordination and direction of the state's economic development efforts in the future," said Berman.
Millions at Stake
Several pieces of legislation were approved as part of a comprehensive economic reform package this past General Assembly session, including the establishment of an Executive Office of Commerce as well as Secretary of Commerce position, which are scheduled to go into effect in 2015.
It is the replacement of the Rhode Island Economic Development Corporation with the Rhode Island Commerce Corporation, which takes effect on January 1st, 2014, that has the potential to impact to adversely affect recipients of federal funding contracts made possible currently through the EDC.
This could include the state's Broadband Initiative, Brownfields program, and numerous other contracts through the now-EDC -- which will now be required to re-apply for federal funding as of January 1st, with no certainty as to whether it will be granted by the federal government -- and when.
Loughlin told GoLocal, "I was in [the State House] for six years, I know how to read a bill. I have a background in federal procurement."
Loughlin continued, "There are three things that are red flags. Any bill that's introduced after deadline to file bills -- this was introduced May 1st. Any bill that's more than 25 pages -- this one's 73. And any bill that's introduced by the leadership team," adding, "It could be any leadership team -- they know they're breaking their own rules."
Implications of Oversight
Part of the intent of the of the creation of the Commerce Corporation, in addition to the change of name was to to "enhance transparency, increase accountability and improve the agency’s performance."
The bill however requires the new entity to apply for new Federal Identification Numbers, which would affect federal programs and grants, as well as the wiring of money to the EDC -- and how long that might take is uncertain.
"I believe that folks knew there would be issues back this summer," said Loughlin, noting Governor Chafee's lack of support for the creation of the new department. "Economic development is an executive function, and the General Assembly passed it against the will of the Governor."
The Governors' office declined to comment on the matter.
As for the potential for how the legislation could impact the state, Loughin said, "The totally new corporation has to go back through and reapply all of those grants. That might be OK, but the federal government might say no."
"I would counsel them to violate the law, and not do it," said Loughlin. "This goes into effect January 1st -- the General Assembly doesn't even meet until the 7th."
Former state administration director and RIPEC executive director, and founding director of the Hassenfeld Institute for Public Leadership at Bryant University, Gary Sasse said, "I cannot comment whether the state will have to re-apply for existing grants and if so what would be involved."
He continued, "However, there are sometimes unintended consequences in major reorganizations of public functions. I do not have total confidence that a lame duck administration will be focused on the complexity of the administrative and organizational details."
Loughlin echoed Sasses's sentiments when he said, "It's the law of unintended consequences."
"Ready, fire, aim -- it has to stop," said Loughlin. "You can't introduce a 75 page bill on the 1st of May."
Related Slideshow: From the EDC to Commerce Corporation
The Rhode Island Economic Development Corporation, which was created in 1995, is slated to be replaced with the Rhode Island Commerce Corporation as of January 2014.
Below is an overview of the formation of the EDC, the fallout of 38 Studios, and the recommendation -- and approval -- of the Rhode Island Commerce Corporation to take its place.
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