Economic Turn-Around Takes Time

Barrington Senator David Bates and Warwick Senator William Walaska say it takes more than one action or law to turn Rhode Island's economy around.

There is not one simple action that can be taken to improve Rhode Island’s economy, some magical financial panacea or a better business climate silver bullet.

There is not one all-encompassing law or executive order that could be enacted that would ensure economic growth, or the creation of new jobs.

Turning Rhode Island’s economy around, erasing the state’s rating as a bad place to do business, finding innovative methods to attract job creators to the Ocean State is going to take time.

Thanks to actions taken by the State Senate in recent years, Rhode Island is already making the concerted effort and taking the steps necessary to restore prosperity to our state.

Begun as a Senate initiative several years ago, the “Making it Easy to Do Business in Rhode Island” effort has already led to reforms to overhaul the income tax, cut red tape and improve access to capital and workforce development. The prime directive of that legislative effort and other bills that have been passed and enacted is to have government work cooperatively with the business community to help them thrive and, in turn, create good jobs for Rhode Islanders who want and need them.

In keeping with that goal, several important bills became law this year that, in conjunction with past actions, will continue to address the needs of business, make Rhode Island more competitive and pave the way for economic growth and job creation.

The state budget that was enacted this year includes funds for the purchase and operation of a web-accessible software system to be used by the state and municipalities, offering a uniform building plan review, permit management and inspection system, all designed to increase the local permitting for small businesses.

Revisions were made to the state fire code, making it more flexible and less costly, helping to reduce the burdens on small businesses that existed under the previous code while still keeping public safety paramount. The newly revised code will, for instance, allow for alternative and less costly means of compliance, less expensive wiring methods and an increased focus on separation within properties. The new law also directs the Fire Safety Code Board to examine added regulatory flexibility for small businesses, including increasing square footage before triggering some of the more expensive code requirements, and to leave in place the exemption provisions for existing apartment buildings, places of worship, funeral homes, marinas and the marine trade industry, restaurants and non-residential barns, as appropriate.

Also approved this year was legislation authorizing the Quonset Development Corporation to issue $7.5 million in bonds for dredging at the Port of Davisville. The dredging will help the port accommodate all modern shipping vessels. By issuing state bonds for the project, as opposed to the use of federal funds, the project can be accomplished more quickly and will preserve a key economic advantage for the port by avoiding a federal Harbor Maintenance Tax. The bond will be repaid by operating revenues of the QDC and companies that utilize the port and the piers for maritime businesses and will not involve any taxpayer money. The Port of Davisville is currently the eighth largest auto importer in North America, receiving more than 125 car ships containing more than 135,000 vehicles per year. The business at the port produces $119 million annually in total output, while employing 1,105 people with personal earnings of $42.6 million and generating $9 million in state and local tax revenues annual. Dredging at the port will help to raise those numbers and expand the growth of other maritime industries at or near the port.

Among the other new laws enacted this year are those that will provide for speedier building permits by ensuring that lack of curb-cut permits will not be cause for a building official to delay examination of a building permit application; updating the Regulatory Fairness Act to remove areas of the law where there had been conflict and providing less costly and less intrusive alternative to business regulations; protecting current agricultural businesses and increase future farming in coastal areas by eliminating certain requirements relative to the Coastal Resources Management Council; boosting agriculture and seafood industries by directing the Department of Environmental Management to establish a program to provide small grants and technical assistance.

Each of these various pieces – taken as a whole – are making it easier and less costly for businesses to come to Rhode Island and for those here to grow and prosper. And as businesses expand, that translates into more jobs available for state residents who, through workforce development commitments adopted by our educational institutions, can receive the training they need for good paying, high quality jobs of the future.

Eliminating red tape and improving access to capital and workforce development are good answers to our economic doldrums and good first steps in the right direction, but more needs to be done.

As a result of several economic forums held and hosted by the Senate and during the course of hearings on legislation that has already been enacted, we heard other suggestions aimed at turning around the state’s economy. Among them – make the state’s corporate tax more competitive; establish an economic and business institute at URI to provide unbiased information for new legislation and new laws; establish clear metrics to evaluate state government operations.

We hope to pursue those and others in the next legislative session, including a serious discussion of whether the state, or the quasi-public Economic Development Corporation, should be in the money-lending business. That could be part of a larger discussion as to whether the duties of the EDC should, instead, be incorporated into a new Department of Commerce, within the executive department.

Falling off a cliff, financially speaking, does not take much time. Climbing back to the top does. With the actions already taken and other issues that will be addressed in the coming year, Rhode Islanders should feel assured that the Senate is fully committed to growing Rhode Island’s economy by making the state a good place to do business, where residents can receive proper training for good paying jobs.

David E. Bates, Republican State Senator from District 32, Barrington, Bristol William A. Walaska, Democratic State Senator from District 30, Warwick

Gary Morse August 24, 2012 at 11:10 AM
One absurd piece of legislation remains: the affordable housing legislation of 2004. In 2004, I agree that RI's real estate market was one of the hottest in America. But the market itself took care of that in 2007. The Federal Reserve data (the FRED system) shows that RI's real estate market collapsed just as fast as it rose. Affordable housing is now everywhere. But our town councils are marching to this 10% affordable housing drumbeat demanding we put up affordable housing all over town. Residents are being asked (told) to increase our own property taxes to help out the developers with reductions in their own property taxes. On top of that are the state and federal tax breaks we have to pay. The legislation was so poorly written that even RI Housing is having a hard time interpreting it. I spoke to their legal counsel this week (Mike Milito) and he agreed it was not well written. It could be improved by simply clarifying how the 10% mandate is counted. Currently, a home in Barrington could sell for $50,000, but it would still not count as an affordable home because the language of the legislation is so poorly written. Our town council wants to read it that only deed restricted homes can be counted in the 10% mandate. But the legislation is very cloudy on that matter. How about clarifying the legislation to include that all affordable homes are counted in the 10% mandate, not just deed restricted homes? That makes sense.
Bill August 24, 2012 at 12:43 PM
Don't change it, How about just abandon it all together!!!
Gary Morse August 24, 2012 at 01:08 PM
Bill, The possibility of scrapping this affordable legislation altogether is something I would welcome, but it won't be done. The practical solution is to recognize that our town council appears to be rigging the numbers simply because of the poorly written statutes which gives cover to say they are following the law. The statutes need to be tightened up. When you read the statutes, it does not say that affordable housing must be counted only from deed restricted homes. In fact, in one pertinent part, it specifically says it does not have to be counted only from deed restricted homes. What our majority town council appears to be doing is cherry picking suggestive language out of the statutes to push an agenda. Only Councilor Bill DeWitt is reading the statutes in a way that favors the residents. The rest seem to be pushing more development that we as residents have to subsidize through higher property taxes. I should point out that we are currently getting legal opinions from a law firm who also represents the interests of the affordable developers. Our majority town council sees no problem with that conflict.
Manifold Witness August 25, 2012 at 08:30 PM
We thank these senators for working toward solutions for RI. There are a couple of simple actions that can be taken to begin to improve RI. New BJs opened today in Seekonk, MA. The parking lot full. 5 out of every 6 vehicles from RI. Just like in the Kohl’s lot and in most of the other parking lots in Seekonk, MA. RI invested $120,000,000 in one video game venture that failed. EDC overhead costs RI taxpayers millions and millions of dollars a year. If the sales tax rates in RI were the same as in MA, and if the existing available incentive money had been used to stimulate the RI economy, RI may have seen more positive economic results by now. The higher RI sales tax rates are high enough to drive shoppers over into MA, but it is wrong-headed for RI government to think that the higher rates will make up for all of the fall-out from the lost business. And all the resources that were wasted (and are still being wasted) on that one video game folly could have been put to much better use.
Gary Morse August 28, 2012 at 12:18 PM
Dear Senator Walaska, Have you changed your position on wind farm subsidies in RI? The cost of these subsidies is being projected to be over 15 cents per KWh, some say as high as 25 cents per KWh. It is believed that Canadian hydro power could be available for as low as 5 cents per KWh. If we are to make the business community believe we are serious about responsible government, we have to do it completly, not a little bit at a time. Leaving some matters undone is not going to create new jobs. Thank you Senator Bates for your approach that wind energy subsidies are bad for business in RI. Sincerely Gary Morse Barrington


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