Alexion slams Chafee for cutting tax credit he backed

SMITHFIELD, R.I. (WPRI) - Drug manufacturer Alexion Pharmaceuticals is criticizing Governor Chafee's proposal to sharply reduce the generosity of a tax credit he offered them just three months ago in exchange for agreeing to keep jobs in the state.

"Alexion is deeply disappointed by Governor Chafee's call to decrease the state's commitment to the vital Jobs Development Act, which he himself publicly supported as recently as last October," Alexion spokesman Irving Adler told WPRI.com. "It was a critical factor in our decision to remain in Smithfield."

Last October, Chafee and the R.I. Economic Development Corporation board agreed to give Jobs Development Act tax credits to Alexion, a Connecticut-based company that uses the former Alpha-Beta Technology factory in Smithfield.

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The budget Chafee proposed this week would reduce the state's corporate tax rate from 9% to 7% over three years, and offset the cost  partly by cutting in half the value of Jobs Development Act credits.

Adler said Alexion employs more than 200 people at its Smithfield factory and a new office building next door. The company is in the process of moving its headquarters to New Haven from Cheshire, Conn., and also operates a research facility in Cambridge, Mass.

"The tax environment is a major factor in our decision as to where to locate new jobs and this proposal by the governor directly jeopardizes our ability to grow and create jobs in the state," Alder argued.

Chafee spokeswoman Christine Hunsinger said the governor proposed the reduction in the tax credit - which primarily benefits CVS Caremark - in order to lower the corporate rate for all Rhode Island businesses. She also noted he was no longer urging scrapping the credit entirely, as he did in 2011.

"Of course he's open to conversations with companies that are affected by it and that's an important part of the process," Hunsinger said. During an interview on WPRI 12's Newsmakers taped Friday, Chafee said his administration reached out to CVS to discuss the proposal with executives there.

CVS got more than $15 million in Jobs Development Acts credits during the 2011-12 fiscal year, but on Thursday the Woonsocket-based pharmacy giant held its fire about Chafee's proposal. "CVS Caremark shares Governor Chafee’s commitment to improving and growing Rhode Island’s economy and we applaud his focus on job creation and a competitive corporate tax rate," spokesman Mike DeAngelis told WPRI.com.

Leading lawmakers have expressed general support for Chafee's proposal to cut the corporate tax rate, although it's unclear whether they'll agree to pay for it with the Jobs Development Act change.

Alexion manufactures Soliris, a drug that treats a rare blood disorder and a rare genetic disease, which went on sale in 2007 after winning FDA approval.

The company added 100 jobs in Smithfield between 2006 and 2009, and 92 of them qualified the company for Jobs Development Act credits, according to the EDC. The company made the minimum corporate tax payment of $500 in 2007, 2008 and 2009.

Chafee issued a statement when the EDC announced the credits for Alexion last October, and he said in part: "By encouraging employment growth through targeted tax programs for proven companies, such as Alexion, we can help businesses to continue to invest in quality jobs in the state and better compete for new economic opportunities in the New England market."

Chafee attended a groundbreaking at Alexion in 2011 and toured the company's plant in Smithfield. "He never had any talks about their moving headquarters here, but he went out and saw the plant and expressed his desire to keep that here," Hunsinger told WPRI.com at the time.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi