The Biotechnology Jobs Growth Act of 2006 is good as far as it goes – it just doesn’t go far enough.
The main premise of the proposed legislation is that the 10-percent investment tax credit granted to biotechnology firms should be extended from the current seven years to 15. The idea is that by prolonging the tax credit’s window, more biotech firms will stay in Rhode Island, creating more jobs. We agree.
And if they stay longer, the bill assumes that real estate developers will be more likely to build facilities that can accommodate them and other biotech firms in need of more space. This is not an insignificant point. Recently, two young firms – RenaMed and Spherics – left the state because they could not find large enough facilities quickly enough to suit their needs.
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But the bill stops there, expecting developers to, in effect, build on spec. That may be one assumption too many.
A better plan would be to enable biotech firms and developers to resolve their facilities problems by allowing the tax credits to be transferable – much like the historic preservation tax credits. The ability to monetize the preservation credit has been key to the success of that program, letting developers use the cash to jump-start their projects. With the right tweaks, this latest job creation bill could do that as well. And if the new law is designed correctly, job growth might be more than just a catchy title.
McMahon’s legacy: a long-term view
In 2003, Mike McMahon walked away from a career as an investment banker to join Gov. Donald L. Carcieri’s administration as head of the R.I. Economic Development Corporation. Last week, McMahon stepped down to return to the capital markets. And while he leaves behind a solid record of jobs creation, it is even more significant that he has changed the way Rhode Island thinks about itself.
McMahon knew that the increasing interconnectivity of the global economy has sharpened the competitive landscape – not just between countries, but between states. Rhode Island found itself losing out for jobs, often to Massachusetts. The correct response, he reasoned, was not to engage in cascading gift-giving to corporations willing to come to town.
Rather, McMahon directed the EDC to come up with a strategy for development that highlighted the state’s competitive advantages. The result of this approach can be seen in the Innovation @ Scale initiative and the Business Innovation Factory.
It is a good sign that McMahon’s successor at the EDC is Saul Kaplan, architect of both those initiatives. As for McMahon, he can look back and truly say he made a difference.
