State expands eligibility for manufacturers for job credits

R.I. COMMERCE SECRETARY Stefan Pryor says that the state is relaxing eligibility for certain job creation tax credits after hearing from manufacturers who found them too restrictive for many of them to be useful. / PBN FILE PHOTO/MICHAEL SALERNO
R.I. COMMERCE SECRETARY Stefan Pryor says that the state is relaxing eligibility for certain job creation tax credits after hearing from manufacturers who found them too restrictive for many of them to be useful. / PBN FILE PHOTO/MICHAEL SALERNO

PROVIDENCE – The Raimondo administration will ask state lawmakers this year to modify state laws authorizing various economic development programs to encourage small manufacturers to apply for incentives.

One of the key requests will expand the definition of a business that could seek refundable tax credits beyond C-corporations, to include S-corporations, partnerships, limited partnerships, limited liability partnerships, limited liability companies and sole proprietorships.

R.I. Commerce Corp. decided to seek an expansion of the eligibility for refundable investment tax credits after speaking with the state’s manufacturers and their representative associations, according to Commerce Secretary Stefan Pryor.

The state polled manufacturers through Polaris MEP, and found that 70 percent of manufacturing companies in Rhode Island are not incorporated as C-corporations, but instead primarily as S-corporations or LLCs, Pryor said.

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In addition, the state will seek to relax the number of jobs that need to be created by companies to qualify for job-related tax credits.

For the past two years, Rhode Island has required companies seeking funds for jobs created under the Qualified Jobs Incentive Tax Credit to create at least 10 jobs. A bill recently introduced would drop the requirement for job creation to five for manufacturers, Pryor said.

That incentive, created in 2016, allows employers to get a tax credit for up to $7,500 per job, per year, depending on the wage paid and the industry.

Dave Chenevert, the executive director of the Rhode Island Manufacturers Association, said he was appreciative that Gov. Gina M. Raimondo and Commerce RI were responsive to concerns expressed by manufacturers. For the past year, he said, he’s been speaking with Pryor about the challenges of the restrictions in the incentive statutes.

For a small manufacturer that employs 20 people, he said, which is the majority of employers in Rhode Island, a requirement to create 10 new jobs would be an “enormous number.”

And, of the original orientation toward C-corporations: “I think there was not enough thought put into the makeup of who you’re trying to help.”

Chenevert is the former owner and manager of Swissline Precision Manufacturing Inc. & Swissline Products in Cumberland, a precision manufacturer serving the medical and aerospace industries.

In other initiatives, the administration is seeking to promote programs that could be used by advanced manufacturers. They include a new manufacturing tax credit, seeded with $3.2 million, which would allow manufacturers to obtain tax credits for investing in new equipment or by adding jobs.

The Innovation Voucher program will be expanded by $1.5 million, with a new focus on manufacturing research and development efforts.

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