Does Rhode Island Have a Clear Strategy for Economic Development?
Tuesday, January 14, 2014
URI Economist Len Lardaro said this week that "there's a lack of meaningful economic leadership (in state government)."
Rhode Island was recently ranked 40th in the country by Moody's for projected job growth 2014, at a forecasted 1.33% dramatically lower than the predicted national 1.7% growth rate. All of this raises the question, what is Rhode Island's plan for economic development?
Slides: See Leadership -- and Candidates' -- 2014 Economic Development Plans BELOW
On the eve of his State of the State address on Wednesday, Governor Chafee remained optimistic at Rhode Island's outlook at the outset of 2014.
“Rhode Island is making progress. Since I took office we have created 11,100 new jobs, unemployment is headed in the right direction, and last month, for the first time in over a year, all five of the economic indicators are headed in the right direction," said Chafee.
With the 2014 General Assembly recently underway, Speaker of the House Gordon Fox outlined his priorities for economic development in the coming months. “A great deal of focus in last year’s legislative session was placed on economic measures, ranging from the structure and governance of our state’s economic development efforts to reinstating the historic tax credit, to creating new workforce training programs. Jobs and the economy will continue to be our highest priority this year."
Senate President M. Teresa Paiva-Weed pointed out that in the recent Moody's projections, Rhode Island was slated to outperform all but one New Engand state -- and improved its ranking over the previous year.
“Rhode Island ranked 46th on this same projection last year, with .5 percent projected growth, and has improved to 40th with 1.33 percent projected growth. That ranks the state ahead of New York, Pennsylvania, and all New England states except Connecticut," said Paiva-Weed. "The Senate will seek to build on this momentum as we continue to focus on the economy and the unemployment rate. A particular focus this session will be on workforce development initiatives. Examining the state’s tax structure is also important as we seek to move the needle.”
Rhode Island General Treasurer Gina Raimondo, who has now officially launched her bid for Governor, unveiled a "bold and innovative" approach to jobs and the economy.
In conjunction her campaign kick-off, Raimondo unveiled a plan that includes the creation of a "Rhode Island Innovation Institute",a focus on workforce development, addressing the upcoming end to the moratorium on school construction and college affordability, and investing in infrastructure -- and creating a "green bank" to leverage public and private funds to "scale up" Rhode Island's green infrastructure.
GOP gubernatorial candidate Ken Block addressed his economic development platform, saying his goal is to "turn Rhode Island's negative business climate into a competitive, job-creating engine for economic growth," focusing on the addressing fixes to the state's unemployment insurance tax and temporary disability insurance tax -- and exempting from future capital gains taxes any new investments in Rhode Island-based businesses.
"To fire up economic development in Rhode Island, we need to systematically address the factors that make our state an uncompetitive place to do business.
Too many politicians talk about creating jobs without providing any specifics. My campaign is based on providing detailed proposals to remedy our economic problems – I will be showing voters exactly how my administration will turn our economy around," said Block.
Earlier in January, House Republicans unveiled a legislative program for 2014 entitled "Getting to 25" aimed at getting Rhode Island “back into the mainstream,” according to House Minority Leader Brian Newberry.
"Getting to 25’ is the broad theme of the GOP agenda, and it speaks to moving Rhode Island up toward 25th place among states rather than settling for 49th or 50, said Newberry in a statement. "The planned legislative package focuses on improving taxpayer protection, stimulating job growth and economic development, and putting in place smarter approaches to state spending."
Mike Stenhouse with the free-enterprise RI Center for Freedom and Prosperity, countered that the General Assembly should minimize its policy creation.
"Rhode Islanders can no longer be held hostage by the status quo. The 2014 General Assembly should be judged not by how many new policies it creates, but rather on how many existing, anti-growth policies it repeals or rolls-back. If Rhode Island can roll-back taxes and spending levels as the Center recommends, tens of thousands of new jobs could be created, along with a lower-cost of living and renewed opportunities for all Ocean State families and businesses."
See more details of the proposed economic development plans BELOW.
Related Slideshow: 7 Strategies for Rhode Island Economic Development in 2014
What will it take to move the Rhode Island economy forward in 2014? GoLocal talked with elected officials, candidates, and leaders for their economic development plans in the coming year.
Below are key elements of the economic priorities for Governor Lincoln Chafee, Speaker of the House Gordon Fox, Senate President M. Teresa Paiva-Weed, House Minority Leader Brian Newberry, gubernatorial hopefuls General Treasurer Gina Raimondo and Ken Block, and RI Center for Freedom and Prosperity's Mike Stenhouse.
Governor Lincoln Chafee
Speaker Gordon Fox
"Among the many pieces of legislation the House will address will be issues of higher education affordability, expanding apprenticeship opportunities, and offering help to our manufacturers. We will also look closely at our tax structure to make sure we are competitive with our neighboring states, including the corporate tax and the estate tax, and I will carefully review the recommendations of the commission studying our sales tax.”
Senate Pres. Paiva-Weed
Greg Pare, spokesperson for the Senate President, said that the Senate is planning to issue recommendations soon on workforce development initiatives to address the skills gap among Rhode Island job seekers.
"An example of a proposal anticipated in that report is the elimination of state’s Indirect Cost Recovery on the Job Development Fund, which is about $1.2 million this year. Those funds would be directed towards job training and skills development programs to provide immediate impact and help workers gain the skills necessary to succeed in today’s economy."
Gen. Treasurer Raimondo
"To grow our economy, we need to make Rhode Island a leader in manufacturing again. Great things can happen at the intersection of government, higher education, and the private sector. Rhode Island is lucky to have thriving institutions in each of these three sectors, and we need to foster collaboration among them to find solutions to our challenges, and spark our economy.
By promoting partnerships in high-growth areas, [Rhode Island Innovation Institute] will help grow our manufacturing base, and create new, high-quality jobs."
"First, we need to fix Rhode Island’s broken Unemployment Insurance program. The state’s Unemployment Insurance tax, paid by employers, is ranked worst in the country by the Tax Foundation. It is one of the factors that makes Rhode Island an uncompetitive place to do business. Also, it is inherently unfair that a large group of businesses are effectively subsidizing the payrolls of a small group of businesses who misuse the system. There is a simple change to state law that can fix this problem."
"Rhode Island’s temporary disability tax (TDI) is broken, and places an unnecessarily high tax burden on Rhode Islanders. This tax, paid for by employees, will be reduced by changing the way we manage the program. As Governor, I will substantially reduce the cost of purchasing this insurance by requiring that Rhode Island’s program adhere to national norms."
"To best encourage new job creation, I propose the following tax incentive: exempt from future capital gains taxes any new investments in Rhode Island-based businesses. This change would create a powerful incentive for investors who are deciding where to locate a new business, or where they relocate an existing one. This proposal has the potential change the economic playing field for Rhode Island."
Minority Leader Newberry
“It would be overly ambitious to set being #1 as a goal right now, but we think 25, the middle of the pack, is a reasonable goal to set, one we think we should pursue, and one we can achieve,” said Newberry. "One of the initiatives is a requirement that every bill receive a fiscal evaluation before it can be heard by committee, better insuring that legislators know the real cost of the legislation they are acting on."
"Another proposal would exempt social security income from RI state income tax, making Rhode Island more tax-friendly for our seniors and keeping them here rather than migrating to more tax-friendly states."
“Strong action is way overdue here. Nearly 60% of Rhode Islanders now believe that the state is headed in the wrong direction. We think they’re right, and our central goal is to get it turned around."
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