Donna Perry: Days of Reckoning in the Kingdom of RI
Thursday, February 09, 2012
If only it were as simple as mastering an animated game.
Rhode Island’s mounting economic development woes, most distinctly centered in its teetering capital city, received a momentary welcome distraction this week with Curt Schilling’s 38 Studios launch of its long-awaited centerpiece video game, “Kingdoms of Amalur: Reckoning”.
More important than the actual game’s launch is what it could represent for the growing Providence Knowledge District as a high-tech video incubator capital at a time when the city needs economic momentum, and fast. But now that Schilling and company have launched, the once hotly debated $75 million dollar tax break that brought the “Kingdom” creators to Providence in the first place, should trigger a wider discussion about the cost, benefits, and choices the state is making about its tax credit programs across the board.
Since Governor Chafee wrapped his Budget address last week around an ABC’s theme, that being an emphasis on Assets, Budget,and Corruption, his team may want to add a few more consonants to the alphabet soup areas of focus. When it comes to really assessing the state’s business tax credit program, try these letters: C-V-S.
No Defining Policy Direction
The Governor has not yet issued any defining policy direction on his view of the overall business tax credit program, but he is right to have issued comments in recent days to indicate he wants a true assessment of the costs, the benefits, the business development advantages, and the true job creation numbers associated with the tax credit programs.
As for the business tax credit program, separate from the film tax credits, an assessment does not have to mean a wholesale abandonment of the program where it is helping to plant seeds and grow the newer high tech sector companies we are trying to locate here. But it may mean a rearrangement of the credit priorities which right now is awarding the state’s highest corporate tax credit to a Fortune 500 company that appears to be doing just fine whether it had a state tax credit or not.
As reported last month by GoLocalProv’s Dan McGowan, the king of the state’s $144 million dollar business tax credit program is none other than our home grown superstar pharmacy chain. Governor Chafee should take note that CVS, which did $94 Billion dollars in sales in 2010, ranks anywhere between 21st-45th on the Fortune 500 List of America’s top revenue earning companies (ranking can fluctuate depending on which measurement, or earnings quarter is accessed).
Should CVS get a Tax Break?
CVS, which outpaces Goldman Sachs on the Fortune 500 list, is the recipient of a $14 million dollar tax break within the wider tax credit program. As the state continues to face plummeting revenues and increasingly difficult budget choices, many affecting extremely vulnerable Rhode Islanders, it would seem the time has come to ask ourselves an important question. Can Rhode Island afford to be providing a $14 million dollar corporate tax credit to a Fortune 500 company that had earnings in the billions just in the last quarter alone?
No Sacred Cows
Chafee should examine the $144 million tax credit program and at least demand a full accounting of the benefits in terms of economic activity and job development versus the revenue the state forfeits.
Furthermore, at a time when he has proposed a restaurant and hotel sales tax increase that will adversely impact the state’s slowly recovering hospitality industry, it seems the mantra of “difficult choices” should allow for no sacred cows.
The hospitality industry is right to stand up to the proposed tax increase and human services advocates are sure to ramp up the volume over a controversial budget cut elimination of dental care coverage for adults on Medicaid. It seems choices indeed need more careful scrutiny when a budget cut (total state savings of $5.6 million) that represents less than half of the CVS corporate tax credit could ultimately cost far more in terms of the hospital emergency room care that would inevitably occurfor dental emergencies for adults who receive dental Medicaid, many whom are developmentally disabled persons.
We may now begin to learn if the controversial $75 million tax credit which brought Curt Schilling’s young enterprise to Providence a couple of years ago is going to translate into the firm establishment of a thriving creative high tech sector here. The top name talent which reportedly collaborated to help bring the game to its launch this week, and the early signs of a strong public reception to it, hopefully mean our tax credit bet on Schilling has paid off. But as for some of the other tax credit program recipients, it could be time that the rules of the game need to change.
Donna Perry is a Communications Consultant.
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