How Rhode Island’s governor aims to rebuild the state’s economy(Read article summary)
Rhode Island Gov. Gina Raimondo is making direct appeals to CEOs and offering their companies large subsidies in an attempt to turn around the state's economy.
Steve Szydlowski/Providence Journal/AP/File
Rhode Island Governor Gina Raimondo (D) has caught the attention of business leaders by offering their companies large subsidies, in an attempt to turn around her state's economy.
Gov. Raimondo played a role in General Electric's decision to open a new software engineering office in the state, as the AP reported, and she is in talks with other businesses. Although the strategy of pitching business leaders directly is one employed by a handful of governors, Raimondo's intensity has earned her attention.
"I think I may do it a little more because our state really needs it," Raimondo, a former venture capitalist, told the AP. "My goal is to get Rhode Island in the room where decisions are being made."
After a thorough pursuit by Raimondo, GE decided to open an office in Providence with 100 employees with salaries averaging over $100,000, in its new GE Digital information technology center, as the Providence Journal reported.
Jeffrey Bornstein, GE's senior vice president and chief financial officer, told the Journal that Raimondo stayed in constant communication with GE after the company had decided to move its headquarters to Boston instead of Providence.
"I can tell you that no state that I’ve interacted with over the last year has done a better job of putting its best foot forward than Rhode Island ... and you have a governor that is absolutely, unequivocally relentless," he said.
Raimondo has pushed for, and received for two years in a row, state budgets that included tax incentives, tax cuts, and other pro-business changes in states law, the Journal reported. The budget that goes into effect July 1 includes a "huge and unprecedented" pool of tax incentives, according the the Journal.
It also expands a program to help pay student loans for new college graduates who take jobs in the science, technology, engineering, and math fields in the state.
The state has already tapped into the tax incentives, pledging $5.6 million to GE and $1.9 million to A.T. Cross, a "high quality pen and pencil" company to keep it in the state.
Despite the favorable state budget, some problems still face Raimondo as she pitches new companies, the Journal reported. Local property taxes, especially in Providence, are high; the state's public education system is weak in the subjects of math, science, and language skills; and a history of corruption in Providence, both at the State House and City Hall, worries possible investors.
This hasn't stopped the governor from pursuing other firms aggressively, the AP reported. Talks "remain in progress" with PayPal, whom she reached out to after they announced they would be canceling plans to open a center in North Carolina after that state passed a controversial transgender bathroom bill. SolarCity, a solar energy corporation, has also committed to adding more jobs in the state, and talks with ESPN have led to the state's becoming a finalist for the annual X Games.
Mark Muro, a senior fellow at the Brookings Institution's Metropolitan Policy Program, said although the state would need more than company-attraction efforts to turn around the state's economy which has been hit by the recession and a longer manufacturing decline, they were a step in the right direction.
"Attraction strategies can be helpful if they're targeted on the right kind of technologies that resonate with the strength of the state," he told the AP. "In the long run, attraction isn't going to rebuild the state economy. But a series of smart, near-term, incremental wins can be very helpful."