Corporate Accountability Is Not a Priority in Rhode Island

When writing the headline for this piece, I initially went with: “Corporate Accountability Is an Afterthought in Rhode Island.”

But I quickly realized that would be a little misleading to readers, as the word “afterthought” implies a person, or group of people, actually starts thinking of something at some point. And I don’t get the impression our governor and her administration ever became too concerned about holding accountable the corporations that have leaned on taxpayers for years.

Take for instance the case of Navy contractor General Dynamics-Electric Boat and its use of jobs training funding in Rhode Island. Continue reading

General Dynamics and the Undermining of Democracy in Rhode Island and Connecticut

If you’re a Connecticut resident who was caught off guard last week by Democratic Gov. Dannel Malloy’s announcement of an $83-million subsidy package to U.S. Navy contractor General Dynamics-Electric Boat, don’t worry—you weren’t alone.

That’s because, while Malloy’s self-described “historic long-term partnership” with Electric Boat had been in the works for months, the giveaway to cover infrastructure expansion and workforce development costs at Electric Boat’s Groton shipyard was virtually impossible for the public to follow and weigh in on in any meaningful way.

From what the public could see, it all started in January when Sen. Cathy Osten (D-Sprague) announced her plan to introduce a bill offering $100-million to Electric Boat for facility expansion, and another $50-million for employee training. A placeholder for the “Act Concerning Funding For Submarine Jobs and Opportunities” was posted online with zero details and then never updated. Continue reading

Despite State Law, Rhode Island Has Never Evaluated Its Business Tax Incentives

[NOTE: An audio version of this story aired on Rhode Island Public Radio.]

In 2013, Rhode Island lawmakers directed the state’s revenue department to analyze tax incentives created to spur economic development. The idea was to assess whether those incentives were actually working.

Linda Katz, co-founder and policy director of the non-profit Economic Progress Institute, was one of the people who supported the law.

“It’s the bang for the buck,” said Katz, whose organization advocates for policies that benefit lower-income Rhode Islanders. “We want to know if we’re giving away money in order to either attract a company here, keep a company here, try to ignite some activity, that we know that, at the end of getting that tax break, we’re actually better off than we were before the company got here.”

But there’s one key problem: the state has yet to produce a single evaluation required under the law. The first report was due last June. Continue reading

Maine State Rep. Jennifer DeChant Sought Corporate ‘Talking Points’ to ‘Counter’ Activists

When faced last year with growing criticism over her plans to propose a $60-million tax deal to one of Maine’s largest private employers, state Rep. Jennifer DeChant turned to an apparently reliable ally: the very company she was advocating for.

“Jon- I am sure you have seen the Op Ed piece below,” DeChant said in a Dec. 4 email to Bath Iron Works attorney Jon Fitzgerald, following the publication that same day of a commentary in Portland’s Press Herald by peace activist Bruce Gagnon, titled, “General Dynamics has no business asking for more tax breaks.”

DeChant continued, “I am looking for some talking points to counter this.” She suggested they would be used in an upcoming meeting with constituents. Continue reading

State Rep. Jennifer DeChant Calls Maine Peace Activists ‘Trigger Happy’ Over Proposed Bath Iron Works Tax Giveaway

In November of last year, Maine peace activists began contacting state Rep. Jennifer DeChant (D-Bath) and Sen. Eloise Vitelli (D-Arrowsic) to voice their opposition to a proposed $60-million tax deal being considered on behalf of General Dynamics subsidiary Bath Iron Works.

“As your constituent, I urge you to reject any tax breaks for General Dynamics,” Mary Beth Sullivan, of Bath, wrote in a Nov. 30 email to Vitelli, cosponsor of the tax bill made available online for the first time last week. “General Dynamics spent $9.4-billion buying back its own stocks between 2013-2016…General Dynamics, like most weapons corporations, gets the vast majority of its operating funds from the federal treasury. The taxpayers are paying the freight from the start.

“Before General Dynamics gets any more state taxpayer dollars it should be required to begin a transition process to build commuter rail systems, tidal power and offshore wind turbines to help us deal with our real problem – global warming.”

The message was among several emails disclosed by Vitelli in response to a Maine Freedom of Access Act request filed by a reporter last month with the intent of gaining greater insight into the development of the Bath Iron Works tax bill. A similar notice was sent to DeChant, who acknowledged its receipt but has yet to provide the requested documents. Continue reading

Bill to Extend Bath Iron Works Tax Deal Cuts Minimum Investment Requirement and Expands Definition of Qualified Expenses

When enacted into law in 1997, the original 20-year, $60-million tax deal from the state of Maine to General Dynamics subsidiary Bath Iron Works was intended to subsidize the cost of a shipyard “modernization” the company said would position it to be a viable and competitive business for decades.

It required the company invest at least $200-million in its facility and allowed for a $3-million annual tax credit to defray the costs incurred from planning, design, engineering, construction, demolition, remodeling, repair, and other expenditures related to the infrastructure project.

But newly proposed legislation to extend the credit, made available online for the first time this week, requires the company to invest only half the amount mandated in the original act and expands the definition of a “qualified investment,” potentially allowing the company to claim reimbursement on employee training. Continue reading

In Maine, a History of Bold Claims and Vague Commitments From General Dynamics

When he gave his keynote address before the Chamber of Commerce of the Greater Portland Region in September 1997, then General Dynamics CEO Nicholas D. Chabraja had reason to celebrate.

It’d been two years since his company, annually among the nation’s largest defense contractors, had acquired local shipyard Bath Iron Works, and not long since it secured a $194-million megadeal with the state of Maine and the city of Bath to subsidize a massive infrastructure “modernization” at its newly acquired facility.

Chabraja decided to thank the more than 700 people gathered at the Holiday Inn By The Bay, as the Portland Press Herald reported, for the apparent role their community played in assuring the viability of a major Maine employer for decades to come.

“A great old shipyard that got its start in the 19th century will have all the support necessary to be a formidable shipbuilder well into the 21st century,” Chabraja, who stepped down as CEO in 2009, said, according to the paper. “In support of BIW, you’ve put your money on the people of Maine—and on a shipyard that will now be around for another hundred years.”

But, little more than 20 years on, officials at General Dynamics are no longer so sanguine. They’re back at the negotiating table, saying the company needs an extension of a key $60-million tax credit component of the 1997 deal in order to remain competitive with a rival shipbuilder in Mississippi.

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Extending Bath Iron Works Tax Deal Would Ignore State Consultant’s Review

As some Maine lawmakers and defense contractor General Dynamics see it, the state needs to continue its Shipbuilding Facility Credit, due to expire this year, if it wants to maintain the competitiveness of subsidiary Bath Iron Works and a crucial part of the state’s economy.

But, if Maine were to keep the multi million-dollar-a-year program going without first making substantial revisions to what some call an obvious sweetheart deal, it would be going against the advice of the very consulting firm it hired to evaluate its tax incentive programs. Continue reading

Rhode Island is Still Not Complying With Its Own Law on Evaluating Tax Incentives

[NOTE: This story is part of an ongoing reporting project being developed for Rhode Island Public Radio.]

Rhode Island appeared to be headed in the right direction in 2013 when it signed into law the Economic Development Tax Incentives Evaluation Act, officially requiring regular analysis of its many “business development” tax breaks to corporations.

But, more than four years on from its enactment, the Evaluation Act has yet to amount to much more than a symbolic victory for the advocates for government and corporate accountability who helped push it through.

Continue reading