Bring back the RI Historic Preservation Tax Credit
Rhode Island lawmakers have spent a lot of time recently searching for ideas to jump-start the state economy. RIPR political analyst Scott MacKay suggests they head back to the future.
Hardly a week passes without Rhode Island’s business, political and public policy elite floating yet another plan for digging our state out of its economic rut. The ideas run the gamut; from modest proposals as providing more internships to keep college students in Rhode Island after they graduate to bigger dreams, such as abolishing the state sales tax.
Nothing is ever easy at the State House, where ideas go to die but grudges never do. But it should not be all that difficult to resurrect the historic tax credit program, which once was a fulcrum for restoring our storied past.
Rhode Island’s historic tax credit program started in 2001, when unemployment was low and the economy was humming along. It was frozen in 2008 when unemployment soared and then-Gov. Don Carcieri and lawmakers decided that at $60 million a year, it was draining too much tax money from state coffers.
Now, Governor Lincoln Chafee is proposing to bring the historic tax credit back at a modest $25 million outlay for the financial year that begins in July.
Lawmakers and the governor ought to be careful about tax credits and other policies that favor one form of economic activity over another. Having the government picking winners and losers in a free economy leads to crony capitalism and insider dealing. This is a real concern, especially after Rhode Island’s stint as a national laughingstock over the failed $75 million taxpayer-backed financing deal for Curt Schilling’s 38 Studios video game fiasco.
But the historic preservation credit is aimed at an economic sector, not an individual company. And preserving the past is embedded in the soul and economy of our small slice of New England.
Rhode Island is one of America’s oldest places. The result is that our state has more federally recognized historic sites per capita than any other state. We manage to cram more history into a small landscape than any other state.
Historic tourism is is one of our state’s great job generators and attractions. People flock here from around the globe to visit our restored and preserved history, from Newport’s Gilded Age mansions to Woonsocket’s Museum of Work and Culture.
All the other New England states, except New Hampshire, give some sort of tax breaks to encourage the restoration of historic structures.
Unlike some other tax breaks, such as the film tax credit program that entices Hollywood studios to make movies here, the historic credits leave behind tangible assets. Indeed, the state Historical Preservation and Heritage Commission estimates that tax credits spurred $1.2 billion in restoration work from Burrillville to Block Island and was especially helpful to our older onetime textile manufacturing centers. Restored buildings also are worth more than rundown old factories and thus harvest more property taxes for our older cities.
Among the biggest hurdles to bringing our economy back is the way the recession ravaged the construction industry. The flurry of foreclosures and the sagging home construction and commercial building market has put thousands of construction and building trade workers in unemployment lines.
In December of 2006, Rhode Island had 23,200 construction jobs, according to state Department of Labor and Training data. In January of this year, that number had dropped to 15,800.
Around the state are historic buildings that will probably require tax incentives to save them from the wracking ball. Those include such gems as the Old Colony Building in Pawtucket, the old Ashton Mill in Cumberland and some of the old red brick factories in Providence’s Jewelry District, such as 95 Chestnut, which is at the core of what state economic gurus are trying to rebrand as the Knowledge District.
Reinstating the historic tax credit program is the very least the General Assembly can do to prepare a prosperous future for a state with a proud past.
Scott MacKay’s commentary can be heard every Monday on Morning Edition at 6:35 and 8:35 and on All Things Considered at 5:50. You can also follow his commentary on our `On Politics’ blog at RIPR.org