Ted Nesi’s Saturday Morning Post: June 11

Quick hits on politics, money and more in Rhode Island

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Happy Saturday! Here’s another edition of my weekend column for WPRI.com – as always, send your takes, tips and trial balloons to tnesi@wpri.com, and follow @tednesi on Twitter.

1. If you’re Governor Raimondo, you’d be hard-pressed to come up with better news than this week’s announcement that GE Digital is coming to Rhode Island. It starts with the blue-chip GE brand – the news just wouldn’t have made the same splash if the company making the announcement was named Acme Electronics. The fact that GE made a bet on Rhode Island will help validate the state in the eyes of other businesses considering investments here, as a sort of Good Housekeeping seal of approval. But more important than the fact that GE is putting some jobs in Rhode Island is which jobs these are. They didn’t throw the state a bone with a throwaway like a soon-to-shutter light-bulb factory – they chose Providence for their new industrial Internet of Things software efforts. And if you follow GE, you know this stuff is a top priority for CEO Jeff Immelt, who’s betting the $117-billion company’s future on it (as chronicled by Bloomberg, the FT and The New York Times.) That not only positions Rhode Island to benefit if Immelt’s vision succeeds, it also represents a vote of confidence in Rhode Island’s talent pool: think URI engineering and Brown computer science, as well as various Raimondo administration initiatives like Real Jobs RI, TechHire and CS4RI. (GE’s decision is striking too when you recall that less than two years ago Rhode Island’s own CVS decided to put its new digital division in Boston, not Providence.) That talent pool question is a crucial one for Rhode Island, as local consultant Kevin Hively explained in a recent slideshow on “Manufacturing 4.0.” Meanwhile, Raimondo is hoping the good news isn’t over: the governor confirmed on this week’s Newsmakers that the state is still in the running for PayPal after multiple meetings, and business buzz suggests Commerce RI has other deals in the pipeline.

2. Unsurprisingly, critics of corporate welfare seized on the disclosure that GE will receive up to $5.6 million in state incentives to defray some of the cost of the new digital office. Former Mass. Secretary of Housing and Economic Development Greg Balecki told me he understands their concerns, but argued incentives are a necessary evil for states seeking to attract companies. “It is the reality of a competitive marketplace,” said Balecki, who served under Deval Patrick. “If you don’t offer some kind of incentives, you’re simply ruling yourself out of the race for a lot of business opportunities.” In Massachusetts, he said, “we think that absolutist position is a very serious handicap and that there’s a way to do it responsibly.” The crucial question, in Balecki’s view, is whether a company is coming solely for the incentives – in which case they’re likely to bolt as soon as the sweeteners run out – or if they have larger business reasons (work force, access to academics, quality of life) to come, and the incentives simply seal the deal.

3. Speaking of incentives, it’s notable which Commerce RI programs got funded in the House budget unveiled Tuesday night – and which didn’t. Real estate was the big winner, with the Rebuild Rhode Island tax credit program given a cap of $150 million and new authority for developers to double-dip for multiple tranches of $15-million credits on multi-phase projects. Governor Raimondo confirmed on Newsmakers that the latter provision is aimed at helping push the much-touted Wexford life-sciences complex across the finish line, though she noted it could help other developments, too. However, lawmakers turned down requests to put money into existing aid for SBIR recipients, a new program to attract high-impact research faculty, or a refundable research-and-development tax credit. That wasn’t just the General Assembly’s doing: Commerce Secretary Stefan Pryor apparently traded those away in budget talks so the additional funding allocated to Commerce could be steered into Rebuild and the First Wave Closing Fund (which GE is tapping). But the GE example itself shows why this might be short-sighted: the need for real estate only comes when companies have innovative products they need space to develop. Putting so much of Commerce’s cash into buildings at the expense of programs that could spur actual innovation could hamstring the growth of the oft-hyped local knowledge economy. And the competition is only getting tougher: Connecticut just passed its own big plan to spur innovation.

4. Take my word: if you’re interested in Rhode Island politics, you want to be in front of your TV Monday night at 5 when our latest investigation airs.

5. A grinning Speaker Mattiello happily took credit for the decision to slash beach fees when he spoke to reporters late Tuesday about the House budget, and rightly so – the idea was an immediate hit on social media, the kind of populist move that resonates with apolitical people. (House Minority Leader Brian Newberry noted that Democrats are taking credit for slashing the same fees they themselves voted to raise just a few years ago.) The beach fees seem symbolic of a budget chock full of items incumbents will be glad to spotlight on the stump, particularly the new tax breaks on pensions and unemployment insurance; retirees vote, and business owners donate. It will be interesting to see how Wednesday’s budget debate on the House floor goes: last year’s ended in record time, and the budget won unanimous approval. Republicans seem less likely to go along with Mattiello (and, particularly, Governor Raimondo) in an election year. Also: no word yet on how the House Finance Committee’s proposal would impact the projected 2017-18 deficit, pegged at $193 million under the governor’s. As the legislature’s fiscal experts noted, the new tax cuts were paired with paring back some of the governor’s spending proposals, so it could be a wash.

6. One person who isn’t happy with the House budget is Vibco CEO Karl Wadensten, the iconoclastic exec who was famously the lone “no” vote on the 38 Studios deal. The object of his ire: lawmakers’ decision to cut $100,000 requested by Governor Raimondo to fund the Lean Government Initiative that promotes operational efficiencies, which Wadensten has long advocated. A House analysis noted the initiative also received a $110,000 Rhode Island Foundation grant, but only $55,000 of that money will be available to replace the $100,000. “I am outraged,” Wadensten told me. “It is so shortsighted. If the speaker’s going to get up and say we’re going to be more business-like, what the hell’s he going to do that with?” He argued Lean is already paying dividends in agencies like DMV and DBR, which will save much more than $100,000 over time. (Ironically, the funding cut came the same week that GE, of all companies, highlighted the benefits of Lean in a Wall Street Journal article.)

7. Also taking a hit in the House budget: DCYF. House leaders quietly axed 43 open jobs (technically FTEs, or full-time equivalents, in government-speak) at the child-welfare agency, reducing its authorized staffing by 6%. That could block DCYF chief Jamia McDonald from hiring the full complement of additional front-line care workers she keeps arguing are needed there.

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8. Our weekly Saturday Morning Post dispatch from WPRI.com’s Dan McGowan: “The city of Providence set off alarm bells in state offices earlier this week when the Council Finance Committee approved a taxing plan without passing a spending plan along with it. The vote on Monday night prompted Mayor Elorza to hint that he might veto the city budget and Auditor General Dennis Hoyle and state revenue director Robert Hull to pen a letter making it clear they disagreed with approving a piecemeal budget. Behind the scenes, folks in the Elorza administration warned that if the council held off on passing the total budget, the threat of a state takeover of Providence could become a reality. (Finance Committee Chairman John Igliozzi repeatedly promised that the City Council would have a full budget to consider.) In the end, the two sides were able to reach a compromise sometime between Tuesday morning and Thursday night that allowed the council to cut homeowner tax rates slightly – the landlords picked up another victory – while slightly raising the commercial tax rate from what Elorza proposed in April. (The proposed $36.65/$1,000 commercial rate is still a 10-cent reduction from the current fiscal year.) Additionally, the council will create a $1-million neighborhood fund designed to function similarly to CDBG grants, a program Igliozzi pushed hard for. There is now little question the budget will sail through the City Council Monday night and again Thursday night – but it would be surprising to see a unanimous vote.”

9. Luis Aponte and Larry Mancini got subpoenas at City Hall on Friday.

10. It’s hard work banking $1 million in campaign cash, as Governor Raimondo demonstrated this week with a busy couple days of fundraising. Tuesday found her in Boston for an opioid panel during the first part of the day, then a fundraiser in the evening. Wednesday she was in New York City for a luncheon with supporters and a nighttime event hosted by Mike Bloomberg’s partner and daughter. And Thursday evening she headed to the Westminster Street law offices of Hinckley Allen for a reception co-hosted by David Rubin, Don Sweitzer, Jay Albaugh, Jen Bramley, Bob Goldberg, Jeff Grybowski, Kevin Horan and Patrick Rogers.

11. If you live or work near a decaying bridge – and in Rhode Island, who doesn’t? – you may have seen one of the new RhodeWorks signs that are going up this month, showing the estimated budget and completion date for the projects. The signs feature a traffic-light system that will supposedly change from green to yellow or even red if a project gets behind, which on Newsmakers led a somewhat incredulous Tim White to ask Governor Raimondo if she’s really prepared to have her name right below a red light on a bridge project. “Absolutely – that’s the whole point,” she replied. “You just asked, what lessons have I learned? Taxpayers deserve accountability. My job is to run a government that is on time, on budget. And the taxpayers deserve to know, are you on time, are you on budget?” She acknowledged the signs are “risky” and said she wasn’t sure if any other governor has implemented them. “And by the way,” she added, “I am sure there will be a bridge or two, a project at some point in time, if not red, yellow. … Then the people deserve to know why.”

12. Something to watch: the Senate is scheduled to vote Tuesday on Sen. Ryan Pearson’s bill to beef up disclosure requirements for locally run municipal pension plans. Those are the 34 retirement plans run by municipalities outside the state-run system, and far less information is easily obtainable about their investment practices. It’s not clear yet if House leaders will take up the measure.

13. Jack Reed had a busy week in Washington, skirmishing with his Senate Armed Services Committee counterpart John McCain over the military appropriations bill. He won a procedural half-victory over McCain by defeating the Republican chairman’s proposal to add $18 million to the bill without providing a corresponding increase for domestic spending, though the Senate also shot down Reed’s alternative. Reed was also among a group of 28 senators who unsuccessfully backed a pilot program to privatize military commissaries.

14. Senator Whitehouse tells Portsmouth High grads to be proud of Rhode Island.

15. Kim Kalunian and I had a great time Tuesday night emceeing the annual fundraiser for Sophia Academy, the independent middle school in Providence for low-income young women. The night’s honoree, philanthropist Joan Sorensen, earned all the praise she received by taking the stage and announcing a $1 million gift to Sophia’s endowment, basically tripling its value on the spot.

16. I’ll be representing Rhode Island on a panel of regional political reporters this coming Monday at PRXNE16, the PR Society of America’s regional confab, in Boston. We’ll be breaking down the presidential race and other hot topics in the news. If you’re attending, stop by!

17. “Housing is set to eat the U.S. economy.”

18. Maybe robots won’t steal all our jobs after all.

19. Your latte is not actually the reason you’re in debt.

20. Set your DVRs: This week on NewsmakersGovernor Raimondo. This week on Executive Suite – Neighborhood Health Plan President and CEO Peter Marino. Watch Saturday at 10:30 p.m. or Sunday at 8 p.m. on myRITV (or Sunday at 6 a.m. on Fox). Catch both shows back-to-back on your radio Sunday nights at 6 on WPRO-AM 630 and WEAN-FM 99.7. And you can subscribe to both shows as iTunes podcasts – click here for Executive Suite and click here for Newsmakers. See you back here next Saturday morning.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He hosts Executive Suite and writes The Saturday Morning Post. Follow him on Twitter, Facebook and Instagram

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