Dismantling EDC again on the table

In the wake of the 38 Studios bankruptcy last spring, Gov. Lincoln D. Chafee said he would study consolidating the state’s economic-development arm within the executive branch to prevent a similar debacle from happening again.
When the analysis he commissioned from the Rhode Island Public Expenditure Council backed the idea, suggesting a new commerce secretary handle all business-related policy, Chafee passed on it. He decided instead to reform the R.I. Economic Development Corporation from the inside.
Now Chafee is faced with potentially having to open a new executive office of commerce whether he wants to or not.
In a wave of 18 economic-policy bills filed this spring, many modeled directly on RIPEC recommendations, House Speaker Gordon D. Fox has proposed dismantling the EDC and replacing it with a more-limited R.I. Commerce Corporation controlled by the commerce secretary.
The House plan goes even further than a Senate package – which also mandates statewide economic planning, greater coordination between state regulatory agencies, and a rebranded EDC – but would not stop short of forming a new secretariat.
Since RIPEC released its EDC recommendations last year, the loudest criticisms have been about adding another layer of bureaucracy and putting independent departments, especially the R.I. Department of Environmental Management, under control of a business-centered agency. In addition to DEM, the RIPEC plan would have placed the R.I. Department of Business Regulation and R.I. Department of Labor and Training under the commerce secretary.
To navigate the environmental issue, Fox’s plan avoids placing whole departments within the newly formed commerce office.
Instead, his bill calls for the commerce office to only “operate various divisions and functions” of those departments. Exactly which functions those would be aren’t specified. Giving the governor leeway to decide how much authority he wants to give the executive office, and potentially leaving environmental regulation independent, could make the proposal more palatable in the General Assembly.
It’s still unlikely to sway Chafee, however.
“The governor has said he doesn’t believe adding additional layers to existing bureaucracy would solve anything, in fact it may hinder things,” said Chafee spokeswoman Christine Hunsinger. “He has also expressed concern with moving [the Department of Environmental Management] under an economic-development arm while DEM has a separate focus.”
Hunsinger added that “moving boxes around” on an organizational chart is less significant than the detailed organizational overhaul Chafee ordered at the EDC by Department of Business Regulation Director Paul McGreevy.
But Greater Providence Chamber of Commerce President Laurie White, one of the steadiest backers of the RIPEC plan, said putting functions, instead of entire departments, under commerce control could be key to winning support in the Senate.
“It is not a wholesale moving of those divisions under the commerce secretary, only the things that stand in the way of business flow,” White said, adding that Senate President M. Teresa Paiva Weed had expressed wariness of moving environmental regulation into the commerce secretary. “We’ve said all along a greater focus and accentuation needs to occur within the executive branch on economic development.”
On the subject of the commerce secretary, Paiva Weed spokesman Greg Pare said only that the Senate president “looks forward to working together with our partners in the House and the governor in the coming weeks to determine the best path forward for economic development in Rhode Island.” Although hopeful that the economic-development structural changes become law, White said some of the bills dealing with narrower business-climate issues are long overdue and shouldn’t be overlooked.
Specifically, she pointed to the bid to eliminate Rhode Island’s long prohibition on biweekly pay for hourly workers and to make Victory Day a floating holiday.
White also supports a bill filed by Rep. Christopher R. Blazejewski, D-Providence, that would create a program providing technical assistance for companies looking to apply for federal Small Business Innovation Research grants.
RIPEC Executive Director John Simmons said when taken together, the proposed economic-development changes this year, plus the internal changes at the EDC, equal one of the broadest efforts to improve the business climate in years.
“This is the year the legislature has … taken a broad look at the business climate,” Simmons said.
“You would have a state government that would be more responisive to the needs of business, that would be able to coordinate and improve the regulatory systems within the state,” Simmons said about the restructuring plan. “There would also be a consensus plan for state support that other plans would be matched to. The fundamentals would be better organized to be more commerce-promoting to commerce-permitting.”
On whether a new executive office of commerce can work without the support of the governor who would be in charge of it, Simmons said it shouldn’t be a problem. He noted that the House bill provides a yearlong transition period before the new structure would have to be in place.
“The [commerce secretariat] would be state law and I think the concepts passed by the General Assembly would be followed,” Simmons said. •