PROVIDENCE – Citizens Financial Group Inc.'s threat to consider moving some jobs to Massachusetts without a tax change supported by Gov. Daniel J. McKee won't be enough to get it done this legislative session, H
ouse Speaker K. Joseph Shekarchi reiterated on Tuesday.
The major reason, he says, is that there's not enough time left in the waning days of the session to vet the proposal.
“There was no consensus for what they wanted and what the [McKee] administration felt comfortable [with]," Shekarchi told Providence Business News. "It came to me very late. I didn’t feel comfortable putting something in the budget that wasn’t agreed upon with the Senate, the division of taxation and the executive branch.
“It has to be a fair deal. And it has to be transparent and with [General Assembly] consensus,” he added.
McKee supported a budget amendment backed by Citizens to change the corporate tax code to allow the use of a “single sales factor apportionment methodology” in determining tax liability. This would allow banks to apportion their net income based solely on in-state receipts rather than a weighted three-factor formula applying payroll, property and a percentage of sales.
On Jan. 1, Massachusetts will transition all corporations, including banks, to a single sales factor structure.
McKee administration officials said if enacted, the Citizens tax amendment would result in $7.7 million in lost revenue this fiscal year, growing to $15.6 million over the full fiscal 2025.
Citizens, which says it has 4,200 employees and $400 million in annual payroll in Rhode Island, argued the current tax structure penalizes the bank for having such a large presence in the state.
The bank also noted that it no longer qualifies for a job-development tax credit that it valued at about $10 million annually.
Shekarchi on May 31 pulled the amendment from the $13.9 billion fiscal 2025 budget approved by the House finance committee but said he'd be willing to work with Citizens on a new proposal lawmakers would consider next year.
“I don’t want to be the speaker who loses Citizens Bank,” he said in a statement.
Citizens responded that same day by saying it was disappointed by the decision and still wanted to see the amendment approved before the General Assembly session ends later this month.
“This decision will make it difficult for the state to compete on a level playing field with Massachusetts and other states and is not in the best interest of Rhode Islanders,” said Rory Sheehan, Citizens’ head of enterprise communications.
Michael Knipper, Citizens executive vice president and head of property and procurement, told PBN before the House finance vote that, "Failure by the state to pass this amendment will undeniably create a landscape that will incentivize us to move at least some operations to Massachusetts and focus our growth plans elsewhere over time."
A Citizens spokesperson did not immediately respond to a request for additional comment on Tuesday, when Shekarchi said he was also planning to meet with bank executives.
“This doesn't mean we can’t roll up our sleeves and work on it and hopefully get it done,” Shekarchi said. “I like Citizens and I want them to stay. I really wish Citizens came forward [earlier]. We had a hearing on the budget article, and they did not testify.”
McKee spokesperson Olivia Darocha in a statement said the administration is “committed to continue working with both Citizens and the General Assembly to reach a positive resolution for Rhode Island.”
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
