RI Needs a Strong Economy to Keep Bank of America
In his Sunday Providence Journal column (not online), John Kostrzewa worries that Rhode Island officials aren’t doing enough to ensure that looming cuts in Bank of America’s workforce don’t come out of our local economy. He suggests that they’re waiting for a more opportune time and insists that they can’t afford to do so.
But the persuasion that he suggests is built upon a big threat:
… the state kept an average bank balance of more than $35 million at Bank of America during the fiscal year that ended June 30. Some federal receipts flow into a general fund account at the bank. And Bank of America is a senior bond underwriter for the state and assists in the marketing and sale of state bonds.
All of that work doesn’t have to go to Bank of America. It could go to other institutions that make commitments to add jobs.
Rhode Island may or may not have the financial leverage to bully the bank. Considering that BoA is looking to save $5 billion per year in personnel costs, the numbers in play may be out of Little Rhody’s league, even with the combined threat of lost business and promise of the state’s famous big-shot handouts.
Just under two years ago, the Bank of America branch on Main Rd. in Tiverton closed down. A manager, there, told me that the branch was profitable, but that the lack of small-business prospects in the town erased the justification for maintaining a presence here. Although the scale is much smaller, Tiverton’s experience suggests a better way forward for Rhode Island.
My mind turns to a CNBC analysis from June of this year, in which Rhode Island managed to be dead last on a list of Top States for Business. In three of the ten subrankings — workforce, technology & innovation, and access to capital — the state stood right on that middle line of mediocrity. It did a little bit better in education and a little bit worse in quality of life. That’s half of the rating’s factors. With the other half, we’re bottom ten material: cost of doing business, infrastructure & transportation, economy, business friendliness, and cost of living.
If Rhode Island wants to halt its slide into backwater and change its status as the Northeast’s Mississippi, the government is going to have to focus on making the state a more attractive place to do business. Rather than one-time giveaways, the state has to lighten up on its taxes and regulations and improve its infrastructure — while decreasing the cost of living and doing business.
Evidence that Rhode Island is serious about turning itself around — and fast — would do more to persuade BoA CEO Brian Moynihan that it’s worth staying here than would threatening letters from every single elected and appointed official from local water authority up to Speaker of the House. Unfortunately, our current governor and General Assembly, Providence’s current mayor, and (all evidence indicates) the state’s electorate, itself, lack the will to do what’s necessary.