WOONSOCKET – Saying the city can’t afford to lose CVS Caremark, Councilman Robert Moreau has introduced a resolution calling on state lawmakers to quash the governor’s proposal to cut the pharmacy giant’s corporate income tax credits.
The City Council is scheduled to vote Monday on the resolution, which says the proposal exposes the city to too much economic risk.
“The potential loss of jobs or possible relocation of CVS Caremark headquarters would not only be detrimental to the State of Rhode Island, but would also be financially devastating to the city of Woonsocket,” the resolution says.
Reached by phone, Moreau said he introduced the resolution, in part, because he was troubled by the absence of an official, on-the-record response to the governor’s proposal from city officials.
CVS, which has already asserted that it would be forced to reevaluate its employment levels if the governor’s proposal is embraced by state lawmakers, needs to know city officials oppose the cuts, the councilman says.
“CVS needs to know we’re on their side,” said Moreau. “We recognize how important they are to Woonsocket and the jobs they bring to the Woonsocket area.”
At issue is a provision of Gov. Lincoln Chafee’s $8.2 billion budget that would halve the income tax credits allowed under the state Jobs Development Act.
The governor wants to reduce the tax break to pay for the cost of a cornerstone of the proposed spending plan – the lowering of the overall corporate tax rate from 9 to 7 percent. Chafee argues that lowering the corporate tax rate for all businesses would have a more widespread and beneficial impact on job creation and commercial investment, even if CVS and a few smaller beneficiaries lose their JDA credits.
The Providence Journal reported earlier this month that the JDA has allowed CVS to cut its corporate income tax rate by more than half every year since 2001. CVS pays the equivalent of 4.25 percent under the JDA, which translated into $13.8 million in 2012 on its taxable income of roughly $325 million.
The nation’s largest drugstore chain, founded in Woonsocket and now headquartered at the Highland Corporate Park, employs some 6,000 people in the state, many of them in Woonsocket and Cumberland. The company says it pumps more than $1.2 billion into the state’s annual gross domestic product and is projected to contribute at least $16.6 billion more by 2022.
Moreau said CVS is the largest employer in both the state and the city. CVS employs an estimated 2,500 residents of the Greater Woonsocket area, which is nearly double that of second-ranking Landmark Medical Center.
John Gregory, president of the Northern Rhode Island Chamber of Commerce, says his organization has also taken a stand against the governor’s proposal.
“In fact our board of directors passed a resolution against it this morning,” said Gregory.
Some argue that CVS is too invested in Woonsocket to pick up stakes, but Gregory said state lawmakers would be well advised to take the company seriously. History is littered with the detritus of broken expectations when it comes to the places big-brand employers call home.
“There are some folks who say they’ll never leave,” said Gregory. “I bet if you talked to the founders of the Minute Clinic they’d tell you they never thought they’d leave Minnesota, then CVS bought them out and moved them to Woonsocket. Look what happened to Metropolitan Life a few weeks ago. North Carolina made them an offer and now there are 200 or more jobs gone from Warwick. I bet if you talked to the people in Framingham a few years back they’d say they’d never thought GM would close, or the people in Schenectady, New York, who thought GE would never leave with tens of thousands of jobs.”
“In this day and age it doesn’t take much for a company to up and move,” said Gregory.
Given all the economic turmoil residents are facing on other fronts, Moreau said the loss of CVS or even a significant diminution in its workforce would wreak havoc on the city’s economy and overall quality of life. The city, which is under the control of a state-appointed budget commission, is facing the threat of bankruptcy if its sweeping, complex plan for wiping out a projected $23.3 million deficit falters in the weeks ahead.
The resolution up for discussion on Monday “petitions the Governor and the General Assembly to maintain the tax credits under the Jobs Development Act to CVS Caremark.”
If approved the resolution would be forwarded to Chafee, members of the city’s House and Senate delegations, the House speaker and the president of the Senate.
“CVS needs to know we’re not just sitting idly by without taking a stand on this,” said Moreau. “They need to know we’re fighting for them and how important they are to the city.”