PROVIDENCE – Call them Rhode Island’s odd couple.
At a time of growing partisan division, Representative David Place, a conservative Republican and retired U.S. Army staff sergeant from rural Burrillville, is finding common ground with Senator Samuel W. Bell, a progressive Democrat and Planetary Science Institute scientist from Providence.
Their common foe: “corporate welfare.”
Place and Bell are sponsoring legislation that would let Rhode Island enter “anti-poaching” pacts with other states, prohibiting them from providing company-specific tax breaks or grants to lure away businesses.
The proposal is modeled after the truce that Kansas and Missouri officials signed in 2019, ending a long-running economic border war that had cost hundreds of millions of dollars while creating few jobs.
The proposal takes aim at one of the economic tools that Democratic Governor Gina M. Raimondo has had in her economic development “tool box.” But now those economic development incentives are coming under fire from both the right and the left.
Place, the House GOP’s deputy minority leader, said Republicans and Democrats agree on issues more often than many people might realize.
“Sam and I agree that these businesses are big boys and girls – they can take care of themselves,” Place said. “If we want businesses to move here, the best way to do that is to make it a good business environment for everyone, not just the hand-picked friends of the elites who think they know better than us.”
Bell, former coordinator of the Rhode Island Progressive Democrats, said, “I do sometimes disagree with our friends on the other side of the aisle. But when we have areas of agreement, it’s important that we work together and collaborate.”
He noted that the Kansas/Missouri truce resulted from a bipartisan agreement to end the poaching that had simply shifted jobs across the state line that runs through the Kansas City metro area.
Bell said members of both parties recognize that “corporate welfare” is a problem. But some view it as a “necessary evil,” believing that if a state stops using such incentives it will lose businesses to states that continue using them.
“If people approach it as a necessary evil, I really hope they take a hard look at this,” he said. “This is a solution.”
The legislation would allow states to enter into pacts in which “each member state is prohibited from offering or providing any company-specific tax incentive or company-specific grant to any entity for a corporate headquarters, manufacturing facility, office space, or other real estate development located in any other member state as an inducement...to relocate.”
Six states are now considering this legislation, including New York and Connecticut, the legislators said.
Too often, they said, states find themselves in a “prisoner’s dilemma” – the paradox in which two rational people might not cooperate even if it’s in their best interests to do so.
“It is best for all to create a level playing field for all employers without any corporate giveaways,” the bill states. “But each level of government has an incentive to subsidize a company, generating a race to the bottom.”
The proposal envisions a national board of gubernatorial appointees that would help state and local governments in “implementing a level playing field for all employers.”
The bill would exclude workforce development grants that train employees and company-specific tax incentives or grants for businesses already in the state.
Bell and Place said the bill is needed in part because “corporate giveaways fuel business inequality.” The biggest businesses end up with the bulk of the public subsidies, they said.
“Corporate America is not Main Street America,” Place said. “What goes on on Main Street in Pascoag and Route 44 in Chepachet is not representative of what goes on on Wall Street.”
And he said Rhode Island has seen some high-profile examples of “corporate welfare.”
For example, the state provided $75 million loan guarantee for 38 Studios, the ill-fated video-game venture of former Boston Red Sox pitcher Curt Schilling.
He noted the state considered proposals to subsidize a new baseball stadium for the Pawtucket Red Sox before the Triple-A affiliate of the Boston Red Sox decided to uproot and open a new stadium in Worcester.
Also, he said he has objected to sales tax breaks provided for an expansion of the General Dynamics Electric Boat facility at Quonset Point.
Place said, “Free market and progressive thinkers realize that the current corporate giveaway incentive system benefits the elite and well-connected, not the everyday citizen.”