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Moore: Feroce Destroys Raimondo’s Economic Strategy

Monday, February 13, 2017

 

Giovanni Feroce

What if I told you that Governor Gina Raimondo’s economic development strategy isn’t an economic development strategy at all.

Has anyone, besides me, ever wondered if maybe it’s just a public relations strategy? The time has come to ask the question. We could even be a little bit more critical of this whole 38 Studio’s Light strategy.

Maybe the Governor’s plan to throw millions of dollars at high profile, big name companies isn’t being done in the name of economic development, but is being done to place bright feathers in her cap. General Electric opening an office here in Rhode Island makes for a good press release, even if it does very little to increase the size of our state’s labor force.

It’s just corporate welfare. The fact that ‘oh everyone else is doing it’, doesn’t make it any less so.

PR, Not an Economic Development

Yet when the Governor sets out onto the campaign trail next year, the folks she talks to will be hearing about the big names she “lured” here with their money. She can shake hands at the Bristol Fourth of July Parade and remind the folks there about all the economic progress we’re making. When she steps up to the podium for the gubernatorial debates, she’ll be talking about General Electric, Johnson & Johnson and Wexford Technologies. The legacy media here will continue to be enthralled by the big names “coming here” and all the promises that coincide.

Look, it might work, in a P. T. Barnum kind of way. That’s a good thing for her because she’ll still by the Governor and enjoy the prestige and the power that goes along with it. Is that all it’s about?

Even if it is, it doesn’t mean that some of us don’t know better or just what she’s up to. And it’s frustrating to watch it all unfold before our eyes. Sometimes, it feels like staring out into the void. All you can do is chuckle.

Count Giovanni Feroce, the man who helped made Alex and Ani a superstar in the jewelry industry, as one of us who knows better.

Rational Criticism

Feroce lambasted Governor Gina Raimondo’s economic strategy of handing out healthy economic subsidies to big name companies during an interview with GoLocal Live last week.

“It’s nonsense,” Feroce said.

“I’m definitely not for incentives. It’s (about) us reducing the cost of doing business.”

I challenge anyone to refute this logic.

Feroce, whose name has been bandied about as a possible GOP candidate for Governor, talked about the need to increase Rhode Island’s manufacturing base here in Rhode Island.

Feroce pointed out that New York City, one of the biggest economic hubs in the universe, has extremely high cost structures.

“Whatever you’re paying for in this space right now, wouldn’t even be what you’d pay for the basement in somewhere in Manhattan,” said Feroce, referring to GoLocal’s offices.

RI Advantages?

Feroce makes a great point that we don’t need big names. We need companies with hundreds upon hundreds of jobs that pay well. They don’t have to sound glitzy and glamorous in a press release. They just need to send Rhode Islanders paychecks for doing honest, productive work.

He used Jacksonville Jaguars owner Shahid Khan’s company, which produces auto parts, here in America as an example.

“Do you know the name of Shaid Khan’s company? No. And I don’t either. But those are the kinds of jobs we want. Those are the thousands of jobs we want. We don’t want 20 jobs. We don’t want 75 jobs. We want thousands of job,” Feroce said.

“...We need those kinds of jobs. We need the bumpers. We need guys who make chairs.”

For those who are curious, Khan’s automobile parts company is called Flex-N-Gate.

If we’re going to land the next Flex-N-Gate, Rhode Island needs to decrease its tax and cost structure. That means we’d have to start cutting spending. It wouldn’t be easy. Special interest groups who have gotten comfortable by living off the fat of the land that is the Rhode Island government would wage large, widescale protests.

But in the end, it would be more fair than giving certain companies economic advantages over others thanks to lucrative subsidies.

Unfair and Unjust

How is it fair to someone like Feroce, who has poured millions of his own money into his own venture, Benrus, to have to stand aside and watch companies like General Electric and Johnson & Johnston receive generous subsidies from Rhode Island just so we can have the privilege of saying that they have a toehold here? It’s not.

In the case of Wexford Technologies, GoLocal obtained data from the state and fact checked the data. The state is spending roughly $32 million on the Wexford Science & Technology project at the land opened up by replacement of route 195.  GoLocal found that the project, at this point, is slated to create 80-90 jobs as a result of this subsidy.

Wow! Let’s use a round number and say that the project is going to create 100 new jobs. That would mean it would cost us $320,000 per job.

If that isn’t “nonsense”, nothing is. We need sound policy, not pompoms.

Russell Moore has worked on both sides of the desk in Rhode Island media, both for newspapers and on political campaigns. Send him email at [email protected]. Follow him on twitter @russmoore713.

 

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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