(The second in a series of Newsmaker interviews with business-community leaders focusing on the R.I. budget deficit and the state’s economy.)
Paul Choquette Jr., chairman of Gilbane Inc., sees the state’s economy from several perspectives. Wearing one hat, he oversees one of the state’s largest construction and development firms with Gilbane. In another role, he advises the state’s top economic development officials on pertinent matters as a member of the R.I. Economic Policy Council board – an entity he co-chaired until Gov. Donald L. Carcieri’s recent decision to fold the council into the R.I. Economic Development Corporation.
PBN: In your view, what is the status of the state’s economy?
CHOQUETTE: I think the statistics speak for themselves in terms of job loss and also what we can all observe around us in terms of the housing crisis, the slowdown in some critical areas of development. If we’re not in a recession, we’re certainly dipping our toes into the waters of a recession.
PBN: Is that reflecting what you’re seeing nationally?
CHOQUETTE: It does, absolutely.
PBN: What are the causes of the slumping economy?
CHOQUETTE: It’s the whole housing-subprime-lack of liquidity situation. But it’s closely followed by the impact of the rising price of oil and all the impacts that it has across the economy – not just from a consumer point of view, but for a manufacturer whose materials have some petroleum base to them. That manufacturer is facing significantly higher prices in 2008 than it was in 2007. So it’s a big-time ripple effect of both those major factors in the economy.
PBN: Are the state’s budget woes impacting the economy?
CHOQUETTE: It has demoralizing effect, I think, on many decision-makers who are frustrated and see the inability to come to grips with years of overspending, Band -Aid solutions to budget deficits and talks, now, of tax increases.
PBN: In your view, is it a spending or revenue issue?
CHOQUETTE: The statistics, again, speak for themselves when it comes to where Rhode Island stands on a national basis in respect to both personal income taxes and the local level – which something that’s being forgotten, real estate taxes.
PBN: Are changes to the state’s tax structure, including the flat tax initiative and changes to the capital gain tax, paying off?
CHOQUETTE: These are not quick fixes. I believe that the flat tax commitment, which was being rolled out over a number of years – that commitment to try to make Rhode Island more competitive at the higher level with Massachusetts … will definitely pay dividends in the near-term. Not tomorrow … but in the next year or two or three.
PBN: Why is it so necessary to compete with Massachusetts?
CHOQUETTE: We’re really part of the Boston economy. People go back and forth all the time. To pay one tax in Rhode Island, so much higher than what you pay across the border in Massachusetts, it was an unsustainable situation that had to be addressed. It’s been addressed [through the changes to the tax system]. To roll that back would be, in my view, nothing short of a disaster. … We need to hold, especially in terms of the capital gains tax. That’s what means most to an entrepreneur. That’s what we need more of in Rhode Island – people that are creative and ambitious enough to start their own enterprise.
PBN: What changes do you see as being necessary to the state budget?
CHOQUETTE: I don’t know enough about it to really weigh in on that. But I do think that this type of a crisis is an opportunity to say, “This is the type of thing the state needs to do.” … I do think we have to look at our cost of compensation for a wide list of state and local employees. I think we’ve gotten out of sync with the real world, particularly with the benefits. It isn’t just at the state level … it’s at the local level. I’d love to see more regional school districts. It works in other parts of the country. Maybe that’s too high a hurdle to get over, but at least, we should regionalize as many services as we possibly can so that these cities and towns can take advantage of enhanced purchasing power, sharing some personnel.
PBN: What’s the long-term key to fixing the problems afflicting the state’s economy?
CHOQUETTE: We’ve got some big-time catching up to do. … We are so far behind Boston in the higher-wage, higher-skilled jobs that is the future of the Rhode Island economy. We’ve got to start to ratchet up and build a work force. We’ve got to attract the entrepreneurs and build upon all the research that’s being done in Rhode Island. … Forty-eight percent of Rhode Island [workers] are at or above the national average. In Boston, it’s 70 percent. That’s an enormous gap, and that’s the gap that has got to be closed over the next five to eight years. Because, if that happens, lots of good things happen to the state budget. If incomes go up and skill levels go up, it opens up opportunities in the middle. As those opportunities improve, hopefully, if we’ve done some good work with the work force, the lower-wage jobs will respond as well.
PBN: Is there progress being made?
CHOQUETTE: The [Greater Providence Chamber of Commerce] is doing some good stuff with this knowledge-based industry study they’ve embarked on. We’re hopeful that a lot of good stuff comes out of that, with a real game plan to pull together [institutions such as] Lifespan and Brown University and the University of Rhode Island and the people that are involved in some very fundamental research. If they’re organized in a more coherent way, I think we’ll start to see some acceleration towards an improved economy. … The other thing that I think can accelerate the growth in Rhode Island is … for the R.I. Economic Development Corporation to have a laser-like focus on those businesses that are most likely to flourish in Rhode Island. •
INTERVIEW: Paul J. Choquette Jr.
Position: Chairman of Gilbane Inc.
Background: Paul J. Choquette Jr., chairman of Gilbane Inc., the parent company of Gilbane Building Company and Gilbane Development Company, previously served as the chairman and CEO of Gilbane Building Company, a position to which he was elected in 1997 after having been president starting in 1981. Choquette joined Gilbane Building Company in 1969, serving as general counsel. He was elected vice president in 1971 and served in that office until his appointment as executive vice president in 1975. Prior to joining Gilbane, Choquette was associated with the law firm of Edwards & Angell in Providence and served as legal counsel to then-Gov. John H. Chafee for two years.
Education: B.S. in political science, Brown University, 1960; LL.B., Harvard Law School, 1963.
Residence:
Barrington
Age: 60
