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After long economic slide, Rhode Island lures new business


Standing in a market between coffee beans and containers of oats and granola, Steven L. Spinner, chief executive of United Natural Foods Inc., told reporters that after looking at 30 possible sites, he had chosen to expand his food distribution company here in Providence, in part because of “very attractive tax incentives.”

Gov. Gina Raimondo then stepped up to the microphones and shot him a mischievous glance.

“A lot of these guys, they come for the tax incentive,” she said, grinning. “But really, they don’t want to have to deal with me if they make the wrong decision. So I’m glad you did the right thing.”

At a time when states are fiercely competing to lure businesses, Raimondo, a Democrat, is scoring a string of successes. During the past 15 months, 15 companies, including Fortune 500 firms, have announced plans to locate or expand in Rhode Island, and 19 real estate projects, including hotels and apartments, have been approved.

Midway through her first term, Raimondo’s frenzy of economic and job development is striking because Rhode Island has long been in a slump. It was the last state to emerge from the recession that began in 2007. As recently as 2014, it bore the nation’s highest unemployment rate for seven months in a row.

But Rhode Island reached a milestone in January when unemployment fell to 4.7 percent — the first time it had dipped below the national average in almost 12 years. At the same time, private-sector employment has reached its highest ever.

Raimondo’s critics say her use of tax incentives — about $130 million so far, according to the Rhode Island Commerce Corp. — amounts to corporate welfare for some of the nation’s richest companies. Former Gov. Lincoln Chafee, a Republican turned independent turned Democrat, said last month that these “giveaways” had turned the state into a “candy store.”

Raimondo has defended her use of the incentives, saying that other states offer them and that to stop would be to unilaterally disarm. She says they are handled in a fiscally responsible way and are only part of her economic strategy, which also includes abolishing the energy sales tax on businesses, putting computers in schools and investing in workforce development, including for people who do not have college degrees. She has also proposed allowing residents to attend two years of public college free.

Moreover, she says, Rhode Island, long eclipsed by the economic powerhouses of Boston and New York, has a lot more to offer than tax incentives. She boasts of its easy access to Boston and New York, as well as to the ocean, while offering a lower cost of living, more affordable real estate and an emerging pool of young talent.

Indeed, after Boston won the sweepstakes last year for General Electric’s headquarters (Boston and the state of Massachusetts gave GE $145 million in incentives), the company acknowledged that Rhode Island had been a strong competitor. Six months later, it announced that it was putting its GE Digital division in Providence.

Other companies coming to or expanding in Rhode Island, in what the state commerce secretary, Stefan Pryor, called a “hit parade,” include Johnson & Johnson, the health care giant; Agoda, a division of Priceline; and Virgin Pulse, a wellness technology firm. Wexford Science & Technology is developing vacant land along Interstate 95 into a technology complex, where anchor tenants will include the Cambridge Innovation Center, a pioneer in shared workspace, and Brown University’s School of Professional Studies.

What ailed Rhode Island? During the recession, housing prices plunged 27 percent, according to a report by the Federal Reserve Bank of Boston. And the manufacturing sector, already weakened when much of its important jewelry-making industry migrated overseas, further collapsed. Raimondo’s father was among those who lost their jobs when the Bulova watch factory closed.

Since then, Raimondo’s efforts have stimulated not only the economy, but also political interest in her as her party, knocked on its heels in November, desperately seeks a way forward.

Raimondo, 45, a Harvard-educated, Yale-trained lawyer who was a Rhodes Scholar and venture capitalist, was the first Democrat to be elected governor here since 1992. She is the first woman to hold the job, and one of only 16 Democratic governors nationwide.

The combination of her aggressive recruitment of businesses, her ambition and her growing national profile has fueled speculation that she might someday run for national office — speculation she dismisses, at least for now.

“I am lockdown focused on my job,” she said in an interview. “If I’m going to focus on anything politically, it would be my own re-election, which itself is 20 months away.”

She has not formally announced that she is seeking re-election, but says she is. Her campaign sent out a fundraising letter late last month that included a New York Times article highlighting her role at a National Governors Association meeting in Washington and mentioning her as a potential presidential contender.

It is just such national attention that her critics bemoan.

“There is a real disconnect between how she is portrayed in the national media and how she’s truly received in Rhode Island,” said Allan Fung, the Republican mayor of Cranston, the state’s second-largest city. He lost to Raimondo, 41-36 percent, in a three-way race for governor in 2014, and is considering challenging her next year.

As of September, when the most recent poll was taken — before much of the business influx — Rhode Islanders gave her an approval rating of 38 percent and a disapproval rating of 55 percent. The poll, conducted online by Morning Consult, had a margin of sampling error of plus or minus 6 percentage points.

Fung said Raimondo’s problems extended far beyond the tax incentives.

Her biggest vulnerability, he said — “the iceberg that hit the Titanic” — was her approval of a $364 million computer system to streamline payments of social service benefits, despite warnings from federal officials that it was not ready. Only months later did she apologize for the debacle, which could take a year to fix.

More recently, Raimondo has found herself in a tangle with the Democratic speaker of the Rhode Island House, Nicholas A. Mattiello. He unleashed a flood of Twitter posts late last month calling her “tone deaf” for resisting his call to eliminate the state’s car tax, the highest in the country. (Raimondo prefers reducing it by 30 percent.) He has also called her plan for free public college “fiscally irresponsible.”

And Raimondo is still getting the cold shoulder from the state’s public unions. In restructuring the pension system in 2011, when she was state treasurer, she raised the retirement age and suspended cost-of-living increases for retirees.

Maureen Moakley, a political scientist at the University of Rhode Island, said Raimondo also faced “latent resentment” rooted in sexism in this culturally conservative state. She said she had heard Raimondo criticized as an elitist, as someone enamored of Wall Street who constantly hires people from outside the state, which rubs some people the wrong way.

“We’re not hiring cousin Vinny anymore,” Moakley said, “and that doesn’t go down well here.”


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