Rhode Island's governor uses incentives to lure tech jobs

Gov. Gina Raimondo's strategy of using tax credits to spur Rhode Island's economic development could create nearly 1,500 new jobs promised by 17 companies that have signed deals with the state.

The Democrat's efforts include some clear wins, such as new high-tech branch offices for General Electric, Johnson & Johnson and Virgin Pulse. But some state legislators are wondering if it's time to scale back the incentives to meet other budget priorities.

The state Commerce Corporation has approved $30.7 million in the job-creation agreements since early 2016, when a new state law championed by the first-term governor took effect. That's in addition to about $131 million in real estate incentives to help private developers build offices, hotels and other construction projects.

"We're clearly on a roll," Raimondo said at a news conference earlier this month as she announced the latest $2.2 million job-creation deal with Waltham, Massachusetts-based Vistaprint Corporate Solutions, which makes custom print products and is a division of the Dutch company Cimpress. The company is planning to open a 125-person national sales office in downtown Providence.

"Almost one company a month," she said. "Seventeen companies in the past 16 or 17 months, and a lot of that is because people are starting to realize what we already know, which is that Rhode Island is a terrific place to live. It's a great place to have a business. High quality of life, great colleges and universities, good location."

Among the companies lured by Raimondo and now on a hunt for local software engineers is New Brunswick, New Jersey-based health care giant Johnson & Johnson, which said it has hired 42 people so far this year to staff a new health technology center near downtown Providence.

For both incentive programs, the tax credits aren't issued until the jobs are created or the new buildings are occupied. But as the state faces other budget problems, fatigue is growing among some lawmakers about giving away money to big businesses.

The harshest critic of the business incentive strategy has been a fellow Democrat and Raimondo's predecessor, former Gov. Lincoln Chafee, but current members of the state legislature are also raising concerns.

"You can't keep giving those incentives out forever," said Democratic House Speaker Nicholas Mattiello. He said the incentives have "clearly worked" in attracting some big-name companies and high-paying jobs, but with the state's budget problems, it might be time to re-examine them.

"No decisions have been made, but those resources are certainly going to have to be on the table," Mattiello said.

Raimondo, a former venture capitalist who has made workforce development her top priority, has repeatedly said that having a toolbox of economic incentives helps Rhode Island compete with the many other states with similar business attraction programs. State economic development officials project that the $30.7 million in job creation incentives jobs will generate $46 million in revenues to the state over the next 12 years.

But in a state burned by past incentive deals, especially a disastrous $75 million agreement with former Boston Red Sox pitcher Curt Schilling's 38 Studios video game company, doubts remain. Republican House Minority Leader Patricia Morgan said there is a place for subsidies but "it's a lot of money for a small number of jobs."

"I think you keep your pot of money and you find a whale," Morgan said. "Some big company that has entry-level positions, mid-level and executive, all the way up. What we're doing is we're bringing in 90 to 100 jobs at a time and they're jobs that most of our graduates can't fill. What's the point of that?"