How to Fix RI’s Business Environment - Experts Weigh In, 2016

Joe Paolino

Former Mayor of Providence, Developer

The Governor got a lot of legislation passed in the last two years and projects are getting ready to get off he ground. This is why people voted for her -- to fix the economy and make it more business friendly. But she's got four years to do the job. We're all anxious and want it done yesterday. But sometimes we're not prepared to go along with the changes needed, there could be some bolder measures, but there needs to be restraint from business or labor or political leaders. 

We need to give her package a chance to work. I think it's better to ask two years from now -- you need to giver her a chance. It's incredible that she was able to get GE jobs, good, $100K jobs. And I know there are other major companies looking to put a branch here or an extension -- I know because they're looking at our space. So see progress taking place-- I think unfortunately. that we have to be patient and let some of this happen.
 

Lisa Ranglin

President of the RI Black Business Association

The Rhode Island Black Business Association is keenly aware of how difficult it is to do business in RI.

Recognizing this, early in 2015, the Rhode Island Black Business Association (RIBBA) petitioned the state legislature to establish a small business lending program that would benefit black owned and other small businesses. As in all states, small businesses in RI form the majority of all businesses and 95.8% of all RI employers are small business. They are major job creation entities. All of RI small businesses were hit hard during the recession. Black owned businesses are all small businesses and many are still struggling to come back. And, of real importance to black and Latino communities where unemployment is always high, minority businesses hire locally. Lack of state policies supportive of small business and limited access to capital reduces the capacity of all minority business to create new jobs and hire.

Based on legislation sponsored by the RI Black Business Association, a study was funded and completed in the Fall of 2015 that clearly indicated a lack of support for small business in Rhode Island. The result? The administration established a small business program of just $5 million with a microbusiness subsection funded at $400,000.

Too little and too late for the many small businesses that form the backbone of the state’s economy. In contrast, the City of Providence through the CDBG program, peeled off $200,000 to fund a program developed by RIBBA to support access to capital for black and Latino owned businesses. The program has the potential of investing $750,000 in small businesses owners in need of funding to support growth.
 

Sam Bell

Progressive Leader in RI

These "business friendliness rankings" are methodologically flawed and essentially meaningless metrics invented to advocate for conservative policy.  However, it is deeply ironic that conservatives like Mattiello and Raimondo fail even under their own metrics.
To actually fix our economy, we need to reverse the machine's disastrous right-wing policies.  We need to repeal the tax cuts for the rich, repeal the Medicaid cuts, repeal the massive expansion of the agency that did 38 Studios, cut property taxes, invest in education, and finally end the refusal to properly maintain our city streets.  
 

Nicholas Mattiello

Speaker of the RI House of Representatives

"This ranking frustrates me and it underscores the need for continued action to improve our economy.  We are taking bold steps to attract business and grow jobs, such as cutting our corporate tax rate to the lowest in New England and reducing unemployment and other business costs. We've given the Commerce Corporation the tools to attract new businesses and now I expect them to deliver. Also, CNBC based 14% of its rankings on infrastructure. We enacted a 10-year plan to fix our roads and bridges this year that was driven by the frustration of our dead-last ranking in this category. We need to continue to address these rankings at an urgent pace, not just for business, but for all Rhode Islanders."  
 
 

Ed Mazze

Business Consultant, Former Dean of URI Business School

I am disappointed in the rankings since there has been some progress in making Rhode Island "open for business" for existing and new businesses. Our ranking could easily improve.

Two things have to happen. First,  Rhode Island businesses have to begin to celebrate and promote their successes and become more active in changing their elected officials. And second, elected officials have to understand that they have done a terrible job in listening to business concerns on issues such as taxes, regulations and energy and health costs and making real legislative changes so that the 95,000 microenterprises and small businesses in Rhode Island will be able to grow, create jobs and succeed.

Unless government changes it approach toward the business community, we can expect to see businesses closing or moving out of state, fewer new business coming to Rhode island and staying, jobs being lost and our unemployment and underemployment rates increasing. Government also needs to be more efficient and smaller. As soon as Rhode Islanders believe that government is working for them rather than for their elected officials, the CNBC rating and other ratings will improve rapidly.
 

Ken Block

Business Leader and Former GOP Candidate for Governor

To seriously begin to change Rhode Island’s economy, the Rhode Island legislature needs to remove its collective head from its collective behind. Slipping $20 million bond issues onto the ballot with no heads up and no debate, legislating all night, holding votes on hundreds of bills in just a few days, defying the will of the people on important reforms like the line-item veto – these are the types of governance problems that scare businesses away from our state.

On the executive side, we mismanage big projects like UHIP and the DMV computer project, and it costs us millions, and there is no accountability.  These troubled projects are examples of government ineptitude of the highest order.  What’s worse is that our government appears to try to cover up for the vendors who have failed to deliver critical systems on time or anywhere near on budget.

Our local budgets are under stress because in too many circumstances local politicians disserve the taxpayers. A great case in point is Warwick, where the firefighters incredibly had a contract provision that allowed them to turn unused sick days into cash every year at 50% (so if you had 20 unused sick days you would get paid for 10 full days of salary as a bonus).  This year, a newly negotiated contract astonishingly increased the payout percentage to 75% from 50%.

Each of the issues I listed above are simple examples of how our government fails us at the municipal, state and legislative levels.  We need much better from our government than we are getting – and until we get it, Rhode Island’s economy will lag the rest of the country.

Anthony Maione

President and CEO, United Way of Rhode Island

We believe that the Governor and the legislature have made good first steps in what will be a longer term solution to raising Rhode Island’s rating on the business-friendly scale.

With that said, we know that housing is a critical issue for our state. We presently have an environment for workers and recent college graduates where 1 in 3 homeowners, and half of all renter households spend more than one third of their income on housing. When a family or an individual spends too much on housing, they can’t pay for other necessities. They can’t save money. They put less into the local economy. The state of housing is also a factor that business leaders need to consider in relocating to our state, if there is a lack of affordable housing for workers, a business may choose to relocate elsewhere.

Our neighboring states invest millions of dollars each year in housing, which is not something that Rhode Island has in its budget. We are glad that the legislature approved Governor Raimondo’s proposal for a $50 million housing bond in November. We support the passage of the bond, and we will continue to work on making affordable housing a line item in the state budget.

Garry Sasse

Head of the Hassenfeld Institute, Bryant University

Harvard's Michael Porter probably has done as much as anybody to bring economic strategy to bear on economic development. He told the National Governors Association that improving productivity and innovation must be the guiding principles for every state policy choice. It then follows that states compete to provide the most productive environment for businesses to grow and prosper. 

Improving productivity in a state's business environment means reducing unnecessary costs of doing business, simplifying and speeding up the regulatory and permitting processes, enhancing the state's higher education and research institution, provide infrastructure to leverage  productivity and taking on special interests to reform the public education system. 
Rhode Island is investing in some of these area but not at the scale that may be needed to make a difference in the business climate. One reason maybe that CommerceRI  priorities are center on corporate welfare real estate deals and not the structural reform needed to improve productivity and thus competitiveness. For example, according to WPRI.com,  in the first 18 months of the Raimondo Administration CommerceRI spent $50 million for over 90 economic development  awards. Analysis shows that over 60% of the dollars went to finance real estate deal.
Company -specific deals put the state government in the position of picking winners and losers. This is not a sustainable growth strategy. A New Jersey report suggests that as many as nine out of ten investment decisions subsidized with tax breaks would have occurred without taxpayer funded subsidies, and other studies have found no conclusive evidence that indicates business tax incentives always have an impact on net economic growth.

Rather than emphasize corporate welfare, Rhode Island can help unlock innovation and economic opportunities by paying more attention to infrastructure , good schools for all kids, lowing property taxes and designing  policies to support small business growth. While Rhode Island has made progress to improve its business climate the national rankings suggest  it maybe time to take a critical look at our funding priorities and assess how CommerceRI is performing.   
 

Harry Adler

Owner of Adler's Hardware, Providence, RI

When GE was looking here, it felt like once of those situations where you can't lose -- you have to figure out how to make it happen. What would be the impact of 900 people coming in. I'd hope they'd all shop at Adlers. These are the consumers that would change the game. To hear that we matched Austin's offer, and that doesn't get it done. It's frustrating, it feels like we're swimming upstream all the time. But that's what we're dealt. We do the best we can with the realities we can.
Job creation -- good job creation -- is what we need. Those of us who live and work here love it. We want it to thrive and survive. So is it the the larger picture, the political climate, I don't know. I just go to work the next day. I just do the best. The worst thing that could happen is to think that things are so systemically broken that they're unfixable. That's not productive.

 
I was optimistic with this last change in administration, but to have blatant business measures like parking meters that penalize and discourage people from shopping locally, that doesn't help. But I somehow remain optimistic that people want to do the job and that everyone from the City Council to the General Assembly will act more responsibly and run the state more like we have to run our businesses.  And part of the core problem is that the jobs running government are so unappealing, I can't imagine how challenging it would be. 
 

Pat Ford

Chairman of the RI Libertarian Party

For generations, Rhode Islanders have fallen prey to a single, critical fallacy. That, the very economic landscape that government has burdened by high costs, dysfunctional services, ruined infrastructure, and a failed educational system, can somehow be "fixed" by the very forces that have corrupted it. Government cannot create jobs. Government cannot "Grow" the economy. The current Governor seeks to perpetuate the same myth. Millions have been poured into the generational failure now referred to as the Commerce Corporation, formerly the EDC.

And despite a legion of a special deals, incentives, tax breaks, and flawed financing schemes, Rhode Island continues to lose jobs. Rhode Island's pension system is again headed to collapse. The Route 195 Corridor is still barren. The "Brain Drain" continues on, relentlessly. Negativity? No, simple facts. Solutions? Remarkably straight forward. Lower taxes, create a line item veto, legislate term limits, enforce revolving doors legislation.

Tell Government to simply go away, and let some semblance of the free market exist in Rhode Island. Only then, will this state eliminate the bigotry of diminished expectations, and exist in an environment where individual talents can flourish, to the benefit of all.
 

Editor's Note: An earlier version identified Ford as a candidate for the General Assembly.

Rick Simone

Communications Expert, Providence, RI

Obviously reading the CNBC article is discouraging to see RI ranked at the bottom. However being the eternal optimist that I am and in knowing my clients and the members of our government we have the ability to change this.

While the state needs to play a pivotal role in the expansion of job creation and a more friendly to conduct business climate it is not there responsibility alone. We as Rhode Islanders can take an approach that shows pride in what our state has to offer. 

We can expand the growth of our businesses from within in the following ways:

* Not outsourcing for vendors from outside RI when the services exist here
* Recruiting talent from residents and those graduating from our many colleges and universities 
* Assisting with investment in job training and career growth programs
* Work with like minded business colleagues to collaborate on projects 
* Large businesses need support the froth of our small business community

Some of these are being done but in my opinion only in small ways. The Commerce Corporation has the ability to create a structure assisting business to be more inclined to do these things.  We also have the ability to grow our tourism & convention industry business by immense numbers. Very talented people are in place in our regions and they could use more resources to assist the individual businesses to promote themselves.
While the Commerce corporation has been putting in place a good number of new programs, the majority of companies do not know about them or do not posses the resource to take advantage of them.
I believe the Governor has the positive outlook and forward thinking mind set to bring RI to be in the top 10 rankings. We just need the right team supporting her to make this happen for the entire business community in the state.
 

Len Lardaro

Business Professor, University of RI

Ranking 50th, or at least #45 through #50, is the norm for Rhode Island. But a couple of things need to be emphasized. All of these comparisons, they're arbitrary, the weights are arbitrary --  they have to be taken with a grain of salt. And this is a lagging indicator -- this is where were were, and not where we are now.

So where are we now? We're a little bit better than a year ago. The legislature and Governor have done some good things but not nearly enough -- given the structural problems we have that are massive. So we've done a few things, but we fall into the same attitude we always do-- we gain 100 jobs in GE, the as what's always been the case, they have one date point, then they have a ruler and interpolate to infinity, that now they'll all be knocking down our door to come here. 

We're spending $1.7M on a new skills program I divided that by our state GDP, and it's 3.18 times ten to the minus 5th -- it's 1/33 of 1% of the state's GDP. Granted, that's not the only thing we do for skills, but how by spending that money will we turn things around? Part of our problem is this Governor, like others, they always rely on outside expertise, and those "experts" don't really know how idiosyncratic Rhode Island's government is. What would work perfect in other state would never work here. 

The Governor raised the question to businesses - why don't you give us another look? They still think of us a high unemployment state - it's come down, for the wrong reasons, but it's come down.  So if businesses reply back, "Well, why should we?" that's the answer I want to hear from elected officials. Do they think it's things like the $1.7M in skills training? Why should they give us a second look?