Hurdles Enabling a Pick-and-Choose Culture

justin-katz-avatar-smiling

Although it leaves me feeling as if there might be more to the story, a Kate Nagle article on GoLocalProv has the strong smell of Rhode Island to it.  The Peregrine Group (no strangers to our insider culture) is prepared to build a large waterfront mixed-use development in Pawtucket, but Rhode Island’s additional costs for building make government subsidies a necessity, and the Commerce Corp. appears to be dragging its feet:

“We have a profound live for the site and the city, and we’ve made a “Rebuild RI” application [with Commerce]. We’ve had preliminary conversations, but right now, the current iteration doesn’t work,” said Kane. “It’s just the economics of new construction. In Boston, I can do projects without the city and state’s help. I’m doing 80 more units in Rumford [Center] with no help. Pawtucket is hard.” …

The Commerce Corporation recently awarded RebuildRI tax credits to Ocean State Job Lot (who had threatened to leave the state if truck tolls were approved), and AT Cross (whose former CEO began serving as a consultant at the Commerce Corporation).

Now, I don’t know whether this particular development is a net positive or negative, but state government’s handing out taxpayer-funded subsidies shouldn’t be the mechanism for making such decisions.  Even if we were to assume that government functionaries are qualified to pick and choose the best projects for Rhode Island, the incentives of politics and government are inefficient, in part because of one unavoidable question:  “the best projects” for whose interests?

If one believes in the importance of government involvement, maintaining the governor’s programs becomes a critical objective.  So, when an iconic company ramps up opposition to a new toll program that government agents think they need, the value of handing that company subsidies far exceeds whatever direct economic development is involved, to the government agents.



Quantcast