Gov. Donald L. Carcieri recognizes that the historic preservation tax credits are a good deal for the state, despite the up-front cost. But – desperate for ways to balance the budget – he has proposed capping the program, retroactively.
First, we would argue that changing the rules in the middle of the game is not ethical and not a way to inspire investor confidence. A story in this week’s Providence Business News (“
Historic tax credits spur development across U.S.”) shows that capping the program is a bad idea, period. Staff writer Kevin Shalvey found that states that enacted caps on previously uncapped historic preservation tax credits effectively shut down the programs.
Last fall, Grow Smart Rhode Island calculated that for each dollar in tax credits, the state’s economy realized an additional $5.35 – not to mention the rehabilitation of properties that were either blighted or headed in that direction. Through 2006, the $160 million invested in tax credits resulted in projects worth half a billion dollars, projects that never would have happened, their developers say, if not for the tax break.
A similar study in North Carolina calculated a $3.20 return for each $1 invested by the state, and an addition of 39,000 full-time jobs created over the nine-year life of the program.
We would like to remind the governor that not only is the historic tax credit an effective program, but it is currently the state’s most effective economic development tool.
There are many difficult decisions that must be made to deal with the deficit – but it was short-sighted thinking that got us into this mess, and this particular short-term fix will only make matters worse in the long run.