Can Anchor credit grow jobs?

Gov. Gina M. Raimondo’s administration has taken a different approach to incentives compared with her predecessor, rolling out a slew of new programs to entice investment in and business relocation to the Ocean State.

Among them is a unique program designed specifically to benefit existing Rhode Island businesses, by turning local enterprises into economic advocates for the state.

The program, dubbed the “Anchor Institution Tax Credit,” provides tax credits to Rhode Island businesses that play a “substantial role” in successfully luring an outside business to Rhode Island, bringing with it a minimum of 10 new jobs.

In 2019, the requirement increases to a minimum of 25 new jobs.

- Advertisement -

It’s difficult to predict how effective the new incentive will be locally, says Laurie White, president of the Greater Providence Chamber of Commerce, but she expects interest will grow once businesses learn more about it.

The governor’s new suite of incentive programs, which includes innovation vouchers, industry cluster grants and a large incentive pool available for companies that locate in the former Interstate 195 land, passed as a part of the fiscal 2016 budget.

White said the incentives are a “welcomed change” compared with the approach taken by Raimondo’s predecessor.

“Gov. [Lincoln D.] Chafee didn’t believe in incentives at all,” said White. “He … was not amendable to looking at what other states were doing.”

The incentive carries a $1.8 million allocation, of which no Rhode Island business can receive in excess of 75 percent in any given year. The R.I. Commerce Corp., which is running the Anchor program, says it is unaware of another tax incentive like it nationally.

University of Rhode Island economist Liam C. Malloy doesn’t generally advocate for state tax credits for outside businesses because, as he points out, companies “may look for greener pastures” once the perks dry out.

“States are in a position where they can get into competition with each other and have a bit of a race to the bottom in terms of tax credits,” Malloy said.

But he’s intrigued by the Anchor incentive, because it tempts individual industries to lure outside businesses, rather than the government doing so.

“Hopefully, it provides a nudge for the companies to get other [businesses] here that would benefit them anyways,” Malloy said.

Neither Malloy nor White knew of any other state that offers a similar tax credit, but the Chamber president says it’s fair to assume wholesale distributors and manufacturers are the most plausible candidates to seek out the incentive.

“I think it’s a strong strategy,” White said. “Having your supply-chain partners close by, so that you can be very agile, is a smart way that [distributors] and manufacturers could help to improve their competitive edge.” •

No posts to display