Donna Perry: It’s Time to Cut Our Losses

Donna Perry: It’s Time to Cut Our Losses

One more unwelcome piece of data in the seemingly endless parade of disheartening news on Rhode Island’s economic condition marched by in recent days and this one was particularly troubling to see.

It had to do with people leaving the state in pretty hefty numbers, but this time it was not about the older, well off, retiree crowd. First reported by WPRI.com’s Ted Nesi, it showed that Rhode Island has had an exodus of young, career-age people leaving here for other states in significant numbers in recent years. 

The data showed our state has lost 10% of its prime working age population, those between the ages of 25-54, in less than a decade, just since 2006.

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This loss of career earners comes on top of other data reported in recent months which indicated the state has seen an out migration equal to roughly 25,000 households over the past decade. That wider population exodus reportedly translates into an estimated $1.2 billion in income that has now left.

A Crucial Time

The data showing the sizable exodus of the younger working age population hurts all the more as it comes just as the state received some much-needed positive news about a drop in the nagging unemployment rate that at last put us below the 10%, double digit threshold.

That’s why right now, as the calendar approaches the halfway point in this year’s legislative session, policy makers and legislative leadership have got to get a few things right if we have any chance of reversing numerous troubling trends.

There are opportunities before the General Assembly this session but they must seize them.

There are indications the state’s tax policies are going in the right direction, but legislators can’t backslide on a lowered income tax rate, and must ignore the push from some quarters to revert to a higher rate on the highest earners.

The Good and the Bad

There is notable momentum to lower the corporate tax rate, consider capital gains tax exemptions, and make other regulatory overhauls favorable to businesses, but lawmakers will have to steer those items all the way through if an improved business climate is to be realized. Hearings held this week over renewing, and possibly, expanding distribution of the historic tax credits can advance needed redevelopment in both Providence and the expanding Warwick airport hub, but the testimony illuminated the fact that the state must proceed this year with a smarter, transparent new tax credit program that gives equal opportunity to smaller businesses if it will truly translate into a jobs booster.

Furthermore, this year’s session must result in the rejection of any legislation that will only exacerbate the state’s high cost of living, which is another contributor to the exodus pattern. Data recently revealed that the greater Providence metropolitan area ranks as the 25th most expensive urban region in the nation. But, unlike other expensive places like New York, RI's capital city lacks the higher income job opportunities for younger career age people to sustain those high living costs.

That’s why organizations like RI Taxpayers are repeatedly taking a stand against legislation that could ruin the already strained finances of local cities and towns. The Legislature will strike a blow against any chance that Rhode Island may have to offer its residents affordable communities if, for instance, binding arbitration for teacher contracts is allowed to pass. RI Taxpayers has also thus far this session warned against legislation to expand mandatory TDI; and has spoken out against proposals connected to a major job training program.

RIT recently testified against attempts to misallocate clearly-needed job training dollars, which funnel through the Job Development Fund (JDF); as well as attempts to increase the costs to businesses to subsidize the fund, and then watch the dollars not get to the intended training programs. Even more concerning has been this session’s growing preoccupation with how to employ ex-cons—through consideration of expanding the state’s already liberal criminal record expungement bill—rather than hone in on how to keep recent, and fleeing, college graduates in Rhode Island.

Time for a Strong Second Half

It’s probably safe to assume many Rhode Islanders who have headed for the state’s exits in recent years would have preferred to stay in their home state, or certainly would prefer to see their 20-something son or daughter be able to stay here after the college years and make their income and career here. We know this exodus can be reversed, as we continue to believe the state’s problems can be fixed. But Rhode Island has to capitalize on its assets; make smarter policy decisions; and have legislators who will resist special interest bills to benefit the few but harm the state as a whole—if there is a chance for the exodus to slow down.

The 2013 General Assembly session unfolded with the presentation of several high profile and well covered economic forums and summits as top leadership declared that economic development would be the top priority for the Legislature this session, period. But as the session now edges closer to its halfway mark on the calendar, the budget articles and lists of bills waiting for action is growing, as is the list of bills needing to be stopped. It’s approaching halftime, and elected leadership needs to organize its second half playbook, and deliver a win this session.

Donna Perry is Executive Director of RI Taxpayers.