Our neighbor to the south – Rhode Island – pulled out all the stops to lure a flashy looking business away from Massachusetts. Now it appears that Curt Schillings 38 Studios is going belly up. It has gone from shiny and promising to the economic equivalent of a slowing rolling baseball slipping between Rhode Island’s shaky legs:
Schilling had relocated 38 Studios from Massachusetts to Providence, R.I., in order to take advantage of a $75-million publicly backed loan from Rhode Island. The company received $50 million of that loan. Schilling’s company, however, was unable to make a $1.1-million payment that came due earlier this month, placing the loan in default, according to a New York Times report.
The situation has become a public crisis for the financially strapped state, which is now on the hook for the loan. Two top officials in the state’s economic development agency, which guaranteed the loan in an effort to stimulate job growth, have resigned. Rhode Island suffers from an unemployment rate of 11.2%, the second-highest in the country after Nevada.
Which brings me to my rant-du-jour. Towns, states, and even countries are in a race to the bottom to see who can give away the most in corporate welfare to lure business. Middleboro routinely gives TIFs – Tax Increment Financing to any decent-sized business that sets up shop here.
I’m on the fence with these things. Unfortunately you are almost forced to give a TIF to get a business. The TIF often includes local hiring preferences to make it more palatable but I’m not convinced that Middleboro typically follows through to see that the terms of the TIF are being met. They might be – I just don’t know.
Congratulations Rhode Island on luring 38 Studios away from MA. And ….. thank you.