A Frank Take

Statehouse Power Brokers Quickly Pay Citizens Bank’s Ransom Demands

Too bad the General Assembly can’t address environmental concerns as rapidly as financial ones raised by multimillionaire CEOs

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The General Assembly passed legislation that will save Citizens Bank more than $23 million, but the budget shortfall will be paid by someone — most likely you and me. (istock)

I can’t speak for the other 1,095,961 full-time Rhode Island residents, but I’m tired of being extorted by Citizens Bank.

After threatening to move jobs and operations out of state for the second time in less than a decade, the General Assembly last week paid Citizens Bank off with taxpayer money. Of the 100 lawmakers who voted during last Thursday’s annual ritual of overtired decision-making, only eight — less than 10% — said nay to the tax change the 13th-largest U.S. bank demanded from our cash-strapped state, which has the 10th-highest tax burden in the country at 9.38%.

The change will cost the state $7.7 million in tax revenue in fiscal 2025, which begins July 1, and about $15.6 million in fiscal 2026 and perhaps beyond, according to calculations by the House Fiscal Office.

Gov. Dan McKee offered to pay an even higher ransom. The governor proposed spending nearly $34 million of our money to buy and renovate a Citizens Bank property in East Providence, once home to a loan office, for state use. The list price is $27 million, and the city of East Providence has assessed the property at $16.94 million.

The governor’s failed offer — Statehouse power brokers said no — to buy and rehab the Citizens Bank property at double its assessed value came a few months after McKee’s fiscal 2025 budget shortchanged the Rhode Island Public Transit Authority by $8 million. Bruce Van Saun, chief executive officer of Citizens Financial Group Inc., must not use public transit.

Of course, low-wealth and middle-income residents will be left to pick up the budget slack and/or already inadequately funded programs that protect public heath and the environmental will be further gutted. Next year RIPTA and its users will again have to beg for financial scraps just to keep the habitually underfunded system from careening over a fiscal cliff.

In comparison, small businesses, the ignored backbone of Rhode Island’s economy, get little in the way of state-sponsored support, except the occasional press release touting the importance of shopping locally. The Ocean State’s collection of businesses without corporate boards and overpaid executives certainly don’t reap routine millions in tax incentives and cuts.

There also is no guarantee that the state’s latest corporate tax gift will save any Rhode Island jobs. For instance, in 2023 CVS Health was awarded $2.1 million in job tax credits and then laid off hundreds of Rhode Island workers a few months later. The system is rigged — hardly breaking news, I know — and the vast majority of our elected officials are fine with that.

Senate Majority Leader Ryan Pearson, a senior vice president at Citizens Bank, most assuredly is.

“I never thought I’d see the day that our state government would allow itself to be extorted and blackmailed by a major corporation,” said Rep. Enrique Sanchez, D-Providence, The Boston Globe reported. “We are supposed to be the party of the working class not the party of the big corporations.”

The representative is right about Rhode Island being blackmailed by a major corporation, but he must have missed Citizens Bank’s 2016 power play, when it basically insinuated it might move out of state if it didn’t get to build a new gigantic office park where it wanted.

(In typical Rhode Island fashion, the State Guide Plan was all but ignored when it came time to build the corporate monstrosity, and no environmental review was conducted.)

Rhode Island, at least until last week, determined a financial institution’s taxes based on three factors: a corporation’s property, payroll, and sales. But last week’s end-of-session present will allow Citizens and other banks to use only the single factor of sales to calculate corporate income tax.

Rhode Island’s Statehouse leaders noted Massachusetts will shift to the single sales factor methodology in January, and they said this legislation will make the Ocean State’s banking tax structure more competitive, according to the June 13 Globe story.

Interestingly, when Massachusetts enacts measures that better protect the environment — say, a bottle bill or robust enforcement — Rhode Island’s politico powers fail to notice. When these purported leaders are asked about it, they routinely say we — the state’s taxpayers — are already overburdened. It’s OK to overburden us to line the pockets of corporate CEOs and shareholders, but not when it comes to protecting Mother Nature.

Rep. Charlene Lima, D-Cranston, noted Citizens is the largest bank in Rhode Island, and said it “has been here longer than Del’s Lemonade,” according to The Globe’s end-of-session coverage.

Perhaps Del’s should enter the extortion racket. Does Van Saun enjoy frozen lemonade?

Lima also noted that 86% of Citizens employees are Rhode Islanders. “So that’s who we would be protecting — over 4,000 working Rhode Islanders who need us to protect them to keep their jobs so they can keep paying taxes in Rhode Island, they can keep shopping and spending money in Rhode Island.”

So a corporation that has $220.4 billion in total assets and reported a net income of $2 billion last year needs to pay less in state taxes to ensure its employees continue to pay theirs, which will likely increase one way or another, since a $23.3 million budget hole was just created. I thought corporations were people too?

Rest assured, those millions in tax savings won’t end up in the bank accounts of Citizens’ employees. The CEO, shareholders, and other rich white guys will need to be taken care of first.

In 2003, Citizens Bank signed a 25-year, $95 million naming rights deal that put its name on the Philadelphia Phillies’ then-new baseball stadium. The principal owner of the Phillies, John Middleton, has a reported net worth of $3.7 billion. He made much of his fortune selling his family’s tobacco business to Philip Morris in 2007 for $2.9 billion in cash.

Citizens Bank Park cost $450 million to build, and nearly half of which ($221 million) was publicly financed. The state of Pennsylvania contributed $85 million and $136 million was funded through a 2% rental car tax levied by the city of Philadelphia.

Van Saun’s compensation for the past two years ($11.7 million in 2022) and ($11.1 million in 2023) totaled $22.8 million. His compensation ratio compared to Citizens’ median employee is nearly 150 to 1. In 2022, Rhode Island’s median household income was $80,650.

Trickle-down economics at work.

It took years, countless committee and task force meetings, and endless Statehouse debate for Rhode Island to ban plastic straws and plastic retail bags. But in less than two months and with faint public discussion, Citizens Bank was able to coax a substantial withdrawal from the general fund. Rather than be held for further study, the legislation to reward a bank constantly looking for a handout raced through committee hearings.

In a May 10 budget memorandum, the McKee administration proposed changing the way Rhode Island taxes banks, from the longtime “three-factor” method to a “single-factor” formula. The governor’s proposal came a month after Mike Knipper, executive vice president and head of property and procurement for Citizens, wrote a letter to lawmakers warning them that the corporation “would strongly consider expanding its corporate footprint and employee base outside of Rhode Island because of differing tax treatment among the states.”

Knipper’s ransom note essentially warned that without this tax update, Citizens might move its 4,200-person state workforce, most of whom work out of a 420,000-square-foot office park in a once-wooded part of Johnston, for tax-friendlier confines. The sprawling compound with 2,400 parking spots opened in 2018 and cost $285 million to build.

Lawmakers should have called the bank’s bluff.

After all, for the August 2018 ribbon-cutting ceremony to open the campus, Citizens put on a show. Employees clad in green waved and smiled to visitors as they drove in, local students marched and sang, a local police honor guard participated in the revelry, and a robotic security guard, equipped with cameras and able to read license plates, patrolled the area, according to a Providence Journal story.

The bank’s senior physical security officer told the newspaper that the robot “shows we’re forward-thinking.” Yes, AI will continue to take jobs, as long as it translates into more money being stuffed into the pockets of the corporation’s higher-ups.

Plus, there are plenty of windows, and they weren’t built for the robots. No matter where anyone sits, Keith Kelly, president of Citizens Bank Rhode Island, told The Providence Journal they won’t be more than 40 feet from a window.

By the way, we — the taxpayers — paid half the cost (some $3 million) to build Route 295 on and off ramps to and from the corporate banking campus. I don’t believe we paid for all those windows, but I can’t be sure if some kind of special corporate tax break wasn’t involved. The Narragansett Bay Commission installed some 7,000 linear feet of new sewer lines at a cost of about $8.5 million. Citizens didn’t have to pay, even though were no plans to extend sewer infrastructure into that area of Johnston until the bank’s plans were announced.

Citizens signed a 20-year tax agreement with the town of Johnston that called for the bank to pay $250,000 annually, or significantly less than one month of Van Saun’s compensation in 2023 ($925,000).

The highest paid corporate employees of Rhode Island’s largest bank always win, at least when it comes to stashing more taxpayer money into their coffers.

Citizens has been the top benefactor of the controversial Rhode Island’s Jobs Development Act program since its inception in 1994, according to Rhode Island Current reporting. The bank and its subsidiaries received nearly two-thirds of the $171.6 million in job-based tax credits offered to eligible companies from 2013 to 2022, according to a Rhode Island Department of Revenue report published last September. In fiscal 2023, Citizens and its subsidiaries received about $21 million in tax credits through the program, according to a report by the state tax division.

Citizens Bank shouldn’t be singled out to pay an unfair share of taxes — for the record, it wasn’t and isn’t — but it’s tiresome that the demands of the rich and powerful are routinely and rapidly, if necessary, met without vigorous debate, unlike, say, the idea of banning nips or gas-powered leaf blowers.

Meanwhile, small, family owned businesses on opposite sides of the Providence River got financially crushed because of the incompetence of Rhode Island Department of Transportation leadership and a slow-to-react Statehouse.

Statehouse leadership jumps to attention to save Citizens Bank at least $23.3 million, but it takes twice as long to produce some commercial spots that note businesses in Providence and East Providence are still open on either side of the broken Washington Street Bridge.

Note: The 2024 General Assembly session ended Friday, June 14, at 1:33 a.m.

Frank Carini can be reached at [email protected]. His opinions don’t reflect those of ecoRI News.

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  1. thanks for this detailed report about Citizen’s greed and RI government cooperation with it. (but I think you meant less than 10%, not 1%, voted agaist it) That Democrats caved again feeds the cynicsm that it doesn’t matter who gets elected, the big boys always win, so many don’t beother to vote. Though that attitude is understandable, it is also dangerous with our democracy itself, such as it is, now at stake.
    You are right that Citizens transgressions is also an environmental issue by their moving much of its workforce out of the metro area to the woods west of I-295 where nobody could commute by walking biking, or transit, plus the new interchange built for them promotes even more energy-imtensive sprawl. Sad!
    I for one will vote with my money by phasing out my use of Citizens, and I hope others who care about the environment or social justice will do the same

  2. My own somewhat personal experience with Citizen’s Bank is not good. Both my mother-in-law and father-in-law had individual checking accounts with Citizen’s with both of them listed as co-owners on each account. My father-in-law also had a car loan in his name only. He went into arears a few months before entering a nursing home and the car was re-possessed. My mother-in-law was already in a nursing home and her fees were being paid from her checking account. Without anyone’s knowledge Citizen’s raided her account to pay off his car loan, even though she was not listed on that loan. Our first clue was when her nursing home payment bounced. Citizen’s is a money-grubbing business and will use any and all methods to make a profit. And if Senate Majority Leader Ryan Pearson is really a senior vice-president at Citizen’s it should most assuredly be a conflict-of-interest violation for him to have any part in this fiasco. Maybe I should get Citizen’s to place an ATM machine in my driveway so that I may also get some tax breaks. Maybe I can get the town to pay for it to be installed? Anything is possible in a state whos’ symbol on the state flag is an anchor representing the weight of government upon non-connected taxpayers and the hope of corporations to get even bigger handouts.

  3. Thanks for catch, Barry. Math mistake corrected. I’m not just bad with words. — Frank Carini, ecoRI News

  4. Frank, I love reading your work. As you age, your writing becomes more accurate and honest if how the world really works. At an age when most people’s vision starts to blur and yours couldn’t be any clearer! After reading this our State’s taxpayers should be outraged and our elected politicians should’ve called the bluff of the corporation’s decision to leave the State. Why people fear the money loathing corporations which have their strangleholds on society is a difficult principle to understand. Once again, I enjoy reading your work: truth, accuracy and factual. Our government has seemingly lost it’s ability to regulate and control reasonable use of public dollars. The older one gets the easier it is to flesh out reality.

    Great work!

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