In Four Years, Taxpayers Spent $18-Million On Medicaid Assistance For Workers at Rhode Island Companies Receiving Millions in Economic Development Tax ‘Incentives’

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Between the state’s 2014 and 2017 fiscal years, Rhode Island allocated $18-million through its Medicaid-funded Rite Care and Rite Share medical assistance programs to employees working at companies that simultaneously received more than $114-million in state subsidies designed to spur job growth and workforce development.

CVS Health topped the list for total Rite Care and Rite Share expenses, as well as total tax incentives received. According to Rhode Island Unified Economic Development Reports, CVS employees and their dependents utilized $5.7-million in medical assistance during the four-year period in which the Woonsocket-based company also received $63-million in tax benefits.

Since 2008, CVS has received more state subsidies than any other business: $175-million of the nearly $350-million disclosed in the Division of Taxation’s annual reports on tax credits and incentives.

The second and third highest totals for Medicaid-funded benefits were at jewelry maker Tiffany & Company, and submarine builder Electric Boat, with employees and their dependents receiving $4.5-million and $3-million in government-funded health insurance benefits, respectively. Continue reading

Connecticut’s General Dynamics Giveaway and Its ‘Astroturf’ Supporters

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The term “astroturfing” comes to mind when reading recent testimony given in favor of a bill under consideration in Connecticut, titled, “An Act Establishing the Apprenticeship Connecticut Initiative,” a proposal with a seemingly well-intentioned name and an obscured agenda: to handout government money to the highly lucrative defense contractor General Dynamics-Electric Boat.

The Trojan Horse here—the bill, among other “investments,” would result in the allocation of $100-million in state grants to fund infrastructure projects at the submarine maker’s Groton shipyard—is not lost on skeptical and genuinely grassroots organizations such as the Connecticut Association of Smaller Manufacturers, which said taxpayers have reason to “fear the complexity of this bill is masking a hidden agenda.”

“The Federal government pays submarine manufacturers billions of dollars to deliver and service their products and these manufacturers can well afford their own capital spending,” the organization said in written testimony recorded April 2. “During a time of fiscal distress, this is an insult to the Connecticut taxpayer. Imagine what we could accomplish if we gave our technical highs schools a $100M grant.”

The organization concluded: [T]he deck seems heavily stacked toward large corporations.”

But you’d never get that sense from reading testimony given by the innocently titled Connecticut Center for Advanced Technology, which never mentions Electric Boat by name or the $100-million grant to subsidize “acquisition of lands, buildings, machinery, equipment or any combination thereof.” Continue reading

The Myth of General Dynamics-Electric Boat and Its ‘Middle Class Jobs’

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The author Joan Didion famously wrote, “We tell ourselves stories in order to live.”

In Rhode Island and Connecticut, we tell ourselves myths about Electric Boat in order to justify building war machines.

There are the obvious myths: that a fleet of nuclear-armed submarines costing upwards of $104-billion will be a force for peace in the world; that executives at parent company General Dynamics gobbling up millions of dollars in compensation each year on the taxpayer dime are “patriotic”; and that some other community will build these weapons systems anyway if Southern New England doesn’t—so why shouldn’t we?

The fourth myth, which might be the most rich, is that the top brass at General Dynamics-Electric Boat actually care about our community, that they’re people committed to providing us with “good middle class jobs,” the kind of “blue collar” work that still provides an income you can raise a family on. Continue reading

General Dynamics Doesn’t Need Money From Connecticut or Maine

[NOTE: A version of this opinion article was published in The Day newspaper, of New London, Conn.]

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General Dynamics is not a poor company.

Far from it.

Like all of the country’s top defense contractors, its stock is trading at record highs. As of this writing, one share in the Falls Church, Virg.-based company costs more than $226, nearly $55 more than tech giant Apple.

General Dynamics’ current market capitalization, a measure of a company’s value, is $67.2-billion, up $14.6-billion from 2016. To put that into context, Maine’s entire gross domestic product was $59.3-billion in 2016.

On a recent earnings call, CEO Phebe N. Novakovic told analysts the company’s revenue last year exceeded $31.7-billion, outperforming the prior year by $412-million. Cash flow for the year was $3.45-billion.

And things should only get better. Continue reading

General Dynamics CEO Calls Republican Tax Law a ‘Happy Event’

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Top brass at defense contractor General Dynamics, owner of New England subsidiaries Bath Iron Works, and Electric Boat, say they are buoyed by the anticipated reduction in their company’s effective tax rate under the sweeping “Tax Cuts and Jobs Act” pushed into law last month by Republican members of Congress and Pres. Donald Trump.

On an earnings call earlier this week, Chief Financial Officer Jason W. Aiken told analysts the company, based in Falls Church, Virg., will likely see its 2017 full year rate of 28.6 percent drop to 19 percent in 2018.

According to a transcript of the call available online, Chief Executive Officer Phebe N. Novakovic characterized the passage of the tax overhaul as “a happy event.” Continue reading

State Rep. Jennifer DeChant Calls Maine Peace Activists ‘Trigger Happy’ Over Proposed Bath Iron Works Tax Giveaway

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In November of last year, Maine peace activists began contacting state Rep. Jennifer DeChant (D-Bath) and Sen. Eloise Vitelli (D-Arrowsic) to voice their opposition to a proposed $60-million tax deal being considered on behalf of General Dynamics subsidiary Bath Iron Works.

“As your constituent, I urge you to reject any tax breaks for General Dynamics,” Mary Beth Sullivan, of Bath, wrote in a Nov. 30 email to Vitelli, cosponsor of the tax bill made available online for the first time last week. “General Dynamics spent $9.4-billion buying back its own stocks between 2013-2016…General Dynamics, like most weapons corporations, gets the vast majority of its operating funds from the federal treasury. The taxpayers are paying the freight from the start.

“Before General Dynamics gets any more state taxpayer dollars it should be required to begin a transition process to build commuter rail systems, tidal power and offshore wind turbines to help us deal with our real problem – global warming.”

The message was among several emails disclosed by Vitelli in response to a Maine Freedom of Access Act request filed by a reporter last month with the intent of gaining greater insight into the development of the Bath Iron Works tax bill. A similar notice was sent to DeChant, who acknowledged its receipt but has yet to provide the requested documents. Continue reading

Bill to Extend Bath Iron Works Tax Deal Cuts Minimum Investment Requirement and Expands Definition of Qualified Expenses

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When enacted into law in 1997, the original 20-year, $60-million tax deal from the state of Maine to General Dynamics subsidiary Bath Iron Works was intended to subsidize the cost of a shipyard “modernization” the company said would position it to be a viable and competitive business for decades.

It required the company invest at least $200-million in its facility and allowed for a $3-million annual tax credit to defray the costs incurred from planning, design, engineering, construction, demolition, remodeling, repair, and other expenditures related to the infrastructure project.

But newly proposed legislation to extend the credit, made available online for the first time this week, requires the company to invest only half the amount mandated in the original act and expands the definition of a “qualified investment,” potentially allowing the company to claim reimbursement on employee training. Continue reading

In Maine, a History of Bold Claims and Vague Commitments From General Dynamics

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When he gave his keynote address before the Chamber of Commerce of the Greater Portland Region in September 1997, then General Dynamics CEO Nicholas D. Chabraja had reason to celebrate.

It’d been two years since his company, annually among the nation’s largest defense contractors, had acquired local shipyard Bath Iron Works, and not long since it secured a $194-million megadeal with the state of Maine and the city of Bath to subsidize a massive infrastructure “modernization” at its newly acquired facility.

Chabraja decided to thank the more than 700 people gathered at the Holiday Inn By The Bay, as the Portland Press Herald reported, for the apparent role their community played in assuring the viability of a major Maine employer for decades to come.

“A great old shipyard that got its start in the 19th century will have all the support necessary to be a formidable shipbuilder well into the 21st century,” Chabraja, who stepped down as CEO in 2009, said, according to the paper. “In support of BIW, you’ve put your money on the people of Maine—and on a shipyard that will now be around for another hundred years.”

But, little more than 20 years on, officials at General Dynamics are no longer so sanguine. They’re back at the negotiating table, saying the company needs an extension of a key $60-million tax credit component of the 1997 deal in order to remain competitive with a rival shipbuilder in Mississippi.

Continue reading

Extending Bath Iron Works Tax Deal Would Ignore State Consultant’s Review

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As some Maine lawmakers and defense contractor General Dynamics see it, the state needs to continue its Shipbuilding Facility Credit, due to expire this year, if it wants to maintain the competitiveness of subsidiary Bath Iron Works and a crucial part of the state’s economy.

But, if Maine were to keep the multi million-dollar-a-year program going without first making substantial revisions to what some call an obvious sweetheart deal, it would be going against the advice of the very consulting firm it hired to evaluate its tax incentive programs. Continue reading

Rhode Island is Still Not Complying With Its Own Law on Evaluating Tax Incentives

[NOTE: This story is part of an ongoing reporting project being developed for Rhode Island Public Radio.]

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Rhode Island appeared to be headed in the right direction in 2013 when it signed into law the Economic Development Tax Incentives Evaluation Act, officially requiring regular analysis of its many “business development” tax breaks to corporations.

But, more than four years on from its enactment, the Evaluation Act has yet to amount to much more than a symbolic victory for the advocates for government and corporate accountability who helped push it through.

Continue reading