Just before Independence Day, Rhode Island Gov. Donald Carcieri signed two bills into law which will provide full-bodied economic subsidy disclosure, a Unified Development Budget, and other safeguards.
Congratulations to Rhode Island’s Poverty Institute and its many allies who raised the issue prominently this past January at their first-ever conference on tax policy; it was well attended by activists and legislators alike.
In addition to web-based annual disclosure of outcomes for nearly every major economic development tax break, the new laws will mandate an impact analysis up front for every deal that must include details (including wages and benefits) about all kinds of jobs to be created (including part-time and temporary), the state’s level of subsidy, and how the project plans to maximize local hiring and minority hiring and minority firm contracting.
The laws also mandate an annual Unified Development Budget, where all forms of state spending for jobs—including heretofore hidden tax spending as well as appropriations—will be reported to the state legislature. The bills are: 2008 – S2661A, which was sponsored by Senate Majority Leader Paiva-Weed and others); and 2008 – H7953A, sponsored by several members of the House Committee on Finance.
RIPI’s senior economist Ellen Frank, who has authored critical studies on the state’s low-quality Tax Expenditure Budgets, called it “a tremendous victory for state taxpayers. The law will shine a bright light on several economic development incentive programs that, until now, have been notoriously opaque and unaccountable. Companies claiming credits for economic development activities must now provide detailed reports on jobs, wages and benefits. This will allow lawmakers, at long last, to evaluate economic development incentives and eliminate those that are ineffective.”
As one state legislator put it: “It is time, given the present economic situation in Rhode Island, to hold the businesses’ feet to the fire. Businesses should demonstrate they deserve to continue to enjoy the tax breaks they received.”