WITH a push to reduce the state’s seemingly intractable unemployment problem taking on new urgency, Gov. Lincoln D. Chafee is moving away from the blanket aversion to job-creation tax incentives for individual companies he showed as a candidate and in his early days in office.
With a push to reduce the state’s seemingly intractable unemployment problem taking on new urgency, Gov. Lincoln D. Chafee is moving away from the blanket aversion to job-creation tax incentives for individual companies he showed as a candidate and in his early days in office.
In his fiscal 2013 budget, Chafee proposes reviving the “project status” program cut by lawmakers last year that exempts companies that promise to hire new employees from paying state sales taxes on building materials and equipment used in expansion projects. Soon after taking office last year Chafee said he too supported curtailing the program, after the EDC granted TD Bank $420,586 in sales tax reductions.
“You’re better off saying, ‘This is our tax structure, and we’re going to work every day to lower it, but that’s what it is right now,’ ” Chafee told Providence Business News in April 2011.
Now Chafee is proposing to bring the program back, in a limited way that excludes expansion of retail space.
In addition to project status, Chafee has also proposed broadening the state’s film tax credit to smaller companies and extending it for another five years while its effectiveness is studied.
While project status is estimated at a modest $1 million in credits for fiscal 2013, the addition of a new tax incentive is also a departure from Chafee’s fiscal 2012 budget proposal, which called for the elimination of the much larger Jobs Development Act.
Ultimately restored to the current budget by the General Assembly, the Jobs Development Act was estimated to save companies $21.26 million in fiscal 2010, with $16.7 million going to CVS Caremark Corp., and was going to be eliminated to help pay for a reduction in the corporate tax rate.
As a candidate, Chafee campaigned extensively against the $75 million loan guarantee the R.I. Economic Development Corporation offered 38 Studios LLC to lure the video game company from Massachusetts to Providence.