Jencunas: Raimondo a Major Factor in Bringing GE to RI
Thursday, January 07, 2016
No salesperson could do more to pitch a product than Gina Raimondo is doing to pitch Rhode Island to GE. Whenever I talk to Rhode Island corporate leaders, GE always comes up and the governor usually earns high praise. Providence real estate magnate and former mayor Joe Paolino summed up the business community’s mood, saying, “It’s not Rhode Island, it’s Gina Raimondo that’s the reason GE is looking so strongly at Providence, because they believe she’s a game changer.”
When GE picks its new home, it will be a defining moment for Governor Raimondo. If the Fortune 500 company chooses Rhode Island, it will validate the governor’s approach to economic development. If another city is chosen, especially if that city is Boston, it will prove how difficult it is for the Ocean State to compete for jobs.
Raimondo is taking an approach to economic development that’s familiar to prosperous states run by Democrats. The blue-state model emphasizes the benefits of being near major universities, having a well-educated population, and (to a lesser extent) the cultural benefits of being somewhere with prominent artistic and theatrical institutions. Bolstering these advantages is targeted tax incentives, usually in the form of lower tax rates for a certain period of time. This is the strategy that has worked in cities like Boston and Seattle, where these advantages are important enough for companies to tolerate the higher taxes and stricter regulations.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTRepublican controlled states do things differently. They rely on low tax rates, both on companies and the high-earning executives who decide where companies go, and a friendly regulatory climate. When these low taxes are combined with corporate subsidies, the deal is often better than anything a higher-tax, blue state can offer.
No state in America has been more successful at creating jobs than Texas. While Rick Perry is best known for his faulty memory and disastrous Presidential campaigns, in his home state he presided over tremendous economic growth. From 2000 to 2014, Texas created (depending on what economic model is used) between one-fourth and one-third of all new jobs in America. After 2007, Texas created almost all the net new jobs in America. This was made possible by the oil boom, but also by the aggressive approach Perry had to wooing companies with huge subsides and a friendly business climate. This is why the state’s economy remains relatively strong even as oil prices continue to drop.
Nobody expects Rhode Island to become Texas. The politicians would never cut taxes enough and the voters would never tolerate the lower level of government services.
Where Rhode Island can compete is against the other blue states. That’s why GE’s decision is so important. If Providence is the new home of GE, instead of the company choosing one of the usual suspects for big companies, it will be a magnet for other companies. Rhode Island will have shown how an energetic governor and hands-on leadership can overcome a lot of obstacles for attracting jobs.
Whatever the outcome, for Providence to be included is a testament to Raimondo’s strengths at communicating with corporate executives. For a state where economic development once meant lavishing subsides on a risky start-up run by a celebrity baseball player, this is a huge step in the right direction. Importantly, unlike 38 Studios or the default-plagued PEDP loans, there is only upside to going after GE. Even if the state doesn’t become the company’s next home, it didn’t cost anything to compete for the jobs.
I didn’t support Governor Raimondo in 2014, but being a finalist for a major corporate headquarters is a big win for her leadership and economic development strategy. In 2013, under Governor Chaffee, somebody who talked about landing a Fortune 500 headquarters would been considered optimistic to the point of delusion. Now, it’s a serious possibility.
Though the governor deserves credit for getting Providence so far, losing to Boston would be a bad sign for the Ocean State’s future. To again quote Joe Paolino, “Providence needs to be the Stamford, Connecticut to Boston’s New York.” This means that Providence lets companies be close to Boston and all its advantages while also paying lower rents and still enjoying a high-quality urban experience. If GE chooses Boston, higher rents and all, it will show how much ground Providence has to make up to be appealing to major companies.
Leadership is essential for economic development, but it can’t do the impossible and convince corporate leaders to overlook glaring flaws. GE’s decision will show how severe those flaws are for Providence and Rhode Island, and whether or not any governor, no matter how skilled her sales pitch is, can convince big companies to make the Ocean State their home.
Brian Jencunas works as a communications and media consultant. He can be reached at [email protected] and always appreciates reader feedback.
Related Slideshow: 5 Economic Projects - Can Raimondo Get Them Done?
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