Credits reported, more data needed

Who got what, FY15A total of $40.5 million was earned and distributed through job-creation and economic-development tax credits and other incentives by the state in fiscal 2015. CVS Health led the way again, although the lion's share of its tax credits are directly tied to its profitability, so the more profit, the more credit. Thus, its total went from $15 million in fiscal 2014 to $23.5 million in the recent period, thanks to improved corporate performance. Here are the major recipients of tax credits for the year, along with the programs that provided the incentives. / Source: R.I. Dept. of Revenue, Division of Taxation
Who got what, FY15A total of $40.5 million was earned and distributed through job-creation and economic-development tax credits and other incentives by the state in fiscal 2015. CVS Health led the way again, although the lion's share of its tax credits are directly tied to its profitability, so the more profit, the more credit. Thus, its total went from $15 million in fiscal 2014 to $23.5 million in the recent period, thanks to improved corporate performance. Here are the major recipients of tax credits for the year, along with the programs that provided the incentives. / Source: R.I. Dept. of Revenue, Division of Taxation

Last week’s release of the yearly tax credit and incentive report by the R.I. Division of Taxation shone a light once again on the price of many tax-incentive programs the state has enacted through the years.

According to acting Director of Revenue David M. Sullivan, 18 businesses in Rhode Island were granted more than $30.1 million in tax incentives from the Division of Taxation for fiscal 2015 by programs designed to create jobs. The total of such tax breaks given since 2008 is $240 million, spread among more than 330 businesses.

In addition to the job-creation tax credits that are the focus of attention, another $10 million in incentives were earned by companies doing business in the Ocean State, including many of the same players that received job-related credits.

As is usually the case, CVS Health Corp. received the lion’s share of the state’s incentive largess, to the tune of $23.5 million, or 57.9 percent of the total. But CVS was not the only enterprise or project to top the $1 million mark in the year, as Citizens Bank, Electric Boat, Fidelity Investments, Woody Allen’s production company, as well as the historic renovation of the former American Insulated Wire works in Pawtucket all received seven-figure help from the state.

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In addition to the just-the-facts nature of the report on incentives, however, there should have been an analysis of the effectiveness of the incentives, says Kate Brewster, executive director of the Economic Policy Institute, pointing to the Rhode Island Economic Development Tax Credit Accountability Act of 2013. The act calls for an analysis that will help determine which programs should be kept and which not. But according to the state, such an analysis is not likely to be seen for quite a while.

Paul L. Dion, the chief of the Office of Revenue Analysis for the state Department of Revenue said that it’s a simple matter of a lack of manpower.

“People have left, and it takes time to train [replacements],” he said. “We are going to get to them as quickly as possible given our resources. But the reality is, it’s a labor-intensive process.”

He did note, however, that the department had completed Unified Economic Development Reports for fiscal years 2011 and 2012, and was working on fiscal 2013 when a loss of staff put the project on hold. And at least from the goals of the incentive programs, the companies that did receive tax credits in those years met or exceeded the job-creation and retention parameters set up by the enacting legislation.

But those reports are not what the 2013 legislation called for, according to Brewster. What is expected is a data-driven, cost-benefit analysis that goes beyond the simple job numbers and asks if the programs in place deliver the biggest bang for the economic buck.

If the state is to be smarter about policy – and fulfill its legislative mandate – it would seem that Dion’s office should be getting fresh resources, and soon. •

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