Rhode Island score compares well in study on corporate welfare

New report looks at state enforcement of standards attached to government subsidy programs

By Will Collette

A new report by Washington-based Good Jobs First, “Money-BackGuarantees for Taxpayers: Clawbacks and Other Enforcement Safeguards in State Economic Development Subsidy Programs,”  ranks Rhode Island at #13 out of 50 states plus the District of Columbia. Rhode Island’s overall score was a “C,” which was good, given that Vermont won first place honors with a “B-.“ 

Good Jobs First, the top experts in the US on the issue of corporate subsidies and accountability, notes in its report that every state has a long way to go to achieve full corporate accountability for the billions states give them in subsidies.

Five major Rhode Island tax subsidy programs were evaluated and scored. Rhode Island gives companies roughly $36 million a year through these programs that are then required to create or retain specific numbers of jobs, often with stipulations about the kind of wages and benefits those jobs bring (burger-slinging jobs at Mickey D’s generally don’t get subsidized).

Rhode Island did well in Good Jobs First’s last report, “Money for Something.” That report evaluated the standards Rhode Island has set for its corporate welfare programs.

Our own state Representative Donna Walsh has been one of the leaders in the General Assembly to push for corporate accountability and scored some notable success in the last session of the General Assembly. For example, she worked with the Governor to insert into the state budget the requirement that companies that receive subsidies must report on the jobs they actually created. 

When companies fail to keep their promises about job creation, Good Jobs First urges states to adopt such enforcement mechanisms as “recovery” or “claw-back” – meaning the company must pay back the subsidy – and “recission and recalculation,” meaning the company loses the tax benefits it had been granted and must pay taxes based on standard rates. When a company is a gross offender, Good Jobs First recommends they be barred from receiving future subsidies for some significant period of time.

Rhode Island received the top score in one category for requiring “mandatory, exception-less penalties. "It is not enough for states to have good job-creation and other performance requirements on paper in their subsidy programs; they must also enforce them diligently and consistently," said Good Jobs First Executive Director Greg LeRoy.