House passes fiscal 2017 budget, grows incentive tools

THE R.I. HOUSE OF REPRESENTATIVES debates the fiscal 2017 budget Wednesday. The document increases the size of economic development tools available to the R.I. Commerce Corp. / PBN PHOTO/ELI SHERMAN
THE R.I. HOUSE OF REPRESENTATIVES debates the fiscal 2017 budget Wednesday. The document increases the size of economic development tools available to the R.I. Commerce Corp. / PBN PHOTO/ELI SHERMAN

PROVIDENCE — The R.I. House of Representatives approved a nearly $9 billion state budget late Wednesday, which includes several tax breaks and dramatically increases the size of state economic development incentives that can be directed to specific projects.
The budget lifts the $15 million cap set last year on projects under the Rebuild Rhode Island program for projects on the former Interstate 195 lands.
The incentive program, created in 2015, is intended to help developers fill financing gaps in renovating historical structures, or in new construction that helps the state’s economy.
In its budget, the House made several changes to the budget introduced earlier this year by Gov. Gina M. Raimondo. Many original proposals were adopted, including discounted beach fees, an increased tax credit for low-income Rhode Islanders, and expansions of the R.I. Commerce Corp. incentives.
The fiscal 2017 budget, which begins in July, was approved by the House 59-13 after more than a five-hour debate of individual requests. The document now heads to the Senate. In a statement, Raimondo said she was pleased with the package approved. “I am grateful to the House for their partnership to pass this jobs plan. We are investing in our students, empowering our teachers, making it easier to do business, and building on our momentum to create high-wage, high-skill jobs in Rhode Island.”
Under the revised budget proposal, a new provision under Rebuild Rhode Island allows a developer, as well as a project tenant, to apply for up to $15 million in tax credits, which are available on occupancy. At the discretion of the Commerce RI board, the previous cap on the real estate development incentive, of up to 30 percent of project cost, can be waived once a year.
The budget creates a new cumulative tax credit maximum for projects in the I-195 district of $150 million.
The I-195 development zone, for the purpose of state incentive programs, is defined as extending outside the I-195 district through a quarter-mile perimeter. This would include much of the downtown area. But legislative leaders said the expanded tax credit program is not intended to help revive the empty Industrial Trust Building.
Said House Majority Leader Marvin L. Abney, D-Newport, as the legislators discussed the article: “It cannot be used for the Superman.”
The largest project now being considered for the I-195 land would cover two parcels, a biological sciences complex proposed by CV Properties LLC, of Boston, and Wexford Science & Technology, of Baltimore.
That project, which remains before the I-195 Redevelopment District Commission, is estimated to cost $250 million in its first phase.
In business-related measures, the budget further reduces the mandatory business tax in Rhode Island to $400 annually.
The budget will place before voters in November several economic development related questions, including $70 million for improvements and pier rehabilitation at Quonset Point.
The proposed budget also reduces, as Raimondo had requested, the unemployment compensation taxes paid by employers, for an estimated savings of $30 million statewide.
House Republicans challenged several of the provisions in the budget, particularly those that involved corporate incentives or economic development expansions.
Rep. Patricia L. Morgan, R-Coventry, said the economic development incentive changes didn’t receive a vetting at the House Finance Committee level, and were troublesome for Rhode Islanders.
She took issue with new authority given the R.I. Commerce Corp. to help direct incentives to new service routes for T.F. Green Airport, as well as the expansion of the Rebuild Rhode Island program on a per-project basis.
The budget also allows the R.I. Commerce Corp. board to make equity investments in businesses, which Morgan said puts taxpayers at risk.
“It’s like buying stock in a company,” she said. “I really don’t think that’s what taxpayers should be doing. We’re asking bureaucrats to make these decisions. If they were really good at these, they’d be working on Wall Street.”

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