Deal or no deal in R.I.?

A group of state lawmakers is charged with developing policies to help preserve and grow the state’s healthy defense industry, in part by providing incentives for new investment, something Gov. Lincoln D. Chafee opposes. More

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ECONOMIC DEVELOPMENT

Deal or no deal in R.I.?

PBN FILE PHOTO/BRIAN MCDONALD
GOOD DEAL?: The $80 million GTECH headquarters in Providence was built after state leaders convinced the lottery giant to stay in Rhode Island. The deal included a 20-year contract to run the state’s lottery.
Posted 4/4/11

A group of state lawmakers and several defense contractors spent a day recently touring submarine-building operations at Electric Boat that employ hundreds of Rhode Islanders, and then climbed aboard a helicopter at R.I. Air National Guard’s headquarters in Quonset Business Park for an aerial view of the state’s defense industry.

The group – officially known as the Special Legislative Commission on Defense Economy Planning – is charged with developing policies to help preserve and grow the state’s healthy defense industry, in part by providing incentives for new investment.

Offering incentives to lure new business or help others expand can include everything from policies to reduce electricity costs or garbage-disposal expenses, as the commission is exploring. And it can include sweetheart tax breaks and controversial loan guarantees like the one the state gave to video game company 38 Studios LLC last year, in exchange for a promise to eventually bring 450 jobs to the state.

But at what point do such incentives become the kind of special-interest deal-making Gov. Lincoln D. Chafee has said he will not support? For now, even Chafee and the R.I. Economic Development Corporation, whose primary purpose long has been to grow jobs in the state, aren’t sure.

In a recent interview, Chafee pointed to the state’s 2003 deal with lottery giant GTECH Corp. as a move he would have opposed as governor, even though it persuaded the company to ditch plans to move to Massachusetts and instead build an $80 million headquarters in Providence, keeping hundreds of jobs in Rhode Island.

And the governor has said he wants to curtail the EDC’s “project status” program, which gives tax breaks to businesses in exchange for job creation. In February, the EDC granted TD Bank $420,586 in sales tax reductions through the program if the bank creates at least 160 full-time jobs over the next three years. Chafee said he would have rejected the deal if it hadn’t been so far into the approval process.

“You’re better off saying, ‘This is our tax structure, and we’re going to work every day to lower it, but that’s what it is right now,’ ” Chafee said last week.

Yet Chafee administration officials say his outlook is more nuanced. While he would turn down “one-off” special arrangements, the governor would likely support broad-based policies that stimulate economic activity with certain industries, they say.

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