Municipalities simply do not have enough money in their budgets to support the Central Rhode Island Development Corporation. That’s the short answer to why the economic development nonprofit will be shutting down at the end of the year.
For the past 11 years, CRIDCO has depended heavily on dues paid by Coventry, Cranston, Cumberland, East Greenwich, East Providence, Exeter, Johnston, North Kingstown, Warwick and West Warwick to help fund its $200,000 annual operating budget and about $10,000 in grants awarded to small businesses, mostly small manufacturers, per year.
George de Tarnowsky, executive director of CRIDCO, said he’s noticed a considerable decline in the municipalities’ ability to fund the organization during the past two years.
“They are facing tight budgets,” he said, so “they have less to give.”
It’s difficult to compete with library books, community development and unfunded liabilities, de Tarnowsky said.
In addition, the property-tax reforms approved last year by the General Assembly imposed strict new limits on local tax levies. Prior to the legislation, communities could increase their property tax rate by a maximum of 5.5 percent each year, regardless of whether their tax base had increased. The new law applies the cap to the levy – so if the base grows, the town can’t just collect an unlimited amount of extra money. And the annual cap on the levy increase is being phased down, so it’s 5.25 percent this year and will gradually drop to 4 percent in fiscal 2013.
The cap is meant to protect property owners. But de Tarnowsky said the side effect is that it reduces the incentives for municipalities to try to attract new businesses or grow existing businesses.
And since CRIDCO focuses on those two objectives, the cap decreases the need for CRIDCO’s services, de Tarnowsky said – not to mention that it limits the municipalities’ budgets.
CRIDCO has lost a good chunk of its corporate sponsorship as well, de Tarnowsky said. The loss has been mostly due to corporate ownership switching from local to national.
When New England Telephone became Verizon Communications, the corporation “cut off a lot of discretionary funding for economic development,” he said. And when Narragansett Electric became National Grid, CRIDCO lost $225,000 in annual funds.
During the most recent CRIDCO board meeting, “the handwriting was on the wall,” de Tarnowsky said. “We didn’t want to hang on just for the sake of hanging on.”
As a result, de Tarnowsky estimates, about 1,500 small manufacturers will go without services and grants CRIDCO once supplied. In 11 years the nonprofit has awarded grants to 112 small companies in the communities where it collects dues.
Most grants were $500 to $600, the maximum being $3,000. Companies used the grants to buy equipment, launch Web sites and sponsor work force training.
De Tarnowsky said CRIDCO purposely did not seek state funding so that it could use funds to help manufacturers with marketing. CRIDCO has helped companies hire a sales representative in Mexico and produce an infomercial.
“In companies with 10 to 15 employees, the owners gets so wrapped up with daily duties … they don’t have time to market,” de Tarnowsky said.
The grants have caused the awardees’ employment to increase by 23 percent and productivity to increase by 30 percent, CRIDCO says, based on before-and-after measurements.
“The niche for [nonprofits] like CRIDCO is to fill the void of going after those smaller companies and helping them,” said Tom Kearney, CRIDCO board member and president of Kearflex Engineering Co., a 30-employee pressure sensor manufacturer in Warwick.
With the state focusing a lot of energy on larger high-tech and biotech companies, Kearney said, there is a lack of attention to small businesses.
He believes in a few years CRIDCO will resurface, because it’s needed.
Since CRIDCO was established in 1996, manufacturing jobs in the 10 municipalities it serves have increased from 33 percent of the manufacturing jobs in the state to 38 percent, de Tarnowsky said.
Though he knows that increase could be due to many factors, he said, “I’d like to think we’ve kept them going, kept them thinking about growth.”
