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Business Matters
by:
John C. Gregory, president/CEO
General Assembly Wrap Up
The 2010 Session of the RI General Assembly is over. The traditional last minute race to the finish, has left all of us breathless once again.
So what were the final results? From the Chamber’s perspective as always there was good and bad legislation , but hits year found more good than bad.
Let’s look a the good first:
On the top of the list has to be the overhaul of the income tax system. This has long been seen as a perceived detriment to a strong economic climate because of the “top end” rate of 9.9 percent. As a matter of fact I had the pleasure to serve on the Governor’s Tax Policy Workgroup
a couple of years ago and the revamping of the income tax system was a major recommendation. Now with three simple rates with the top being 5.99 we are much more competitive with our neighbors in
Massachusetts
and
Connecticut
. This one change moved us from 44th to 41st in rankings of tax climates in the
United
States
, according to the Tax Foundation, a nonprofit group in
Washington
,
D.C.
. Now granted this doesn't put us in the top half but it is a significant move upwards. For example in 2002 we ranked 49th.
Also, a predictable school aid formula. While it didn’t please everyone, it will help us with our Race to The Top application and removes the stigma of being the only state in the nation without one.;
Talking about competing with
Massachusetts
and
Connecticut
, we were glad to see that the voters would once again have the opportunity to vote for a local (
Lincoln
) and state referendum on Casino Gambling. A lot has changed since the last time this was on the ballot especially in
Massachusetts
.
Other key measures included:
Provide up to $250,000 in new funding to support the statewide master application system in the secretary of state’s office, ensure that business applicants get their licenses approved in a timely fashion, change the state fire code to ensure speedier approvals and uniform training and enforcement across Rhode Island, allow for concurrent review of permits, so that businesses don’t have to wait for one permit to be approved before seeking approval on the
next permit, require that four of the 12 seats on the R.I. Economic Development Corporation’s board of directors be held by small-business representatives; and establish an Office of Regulatory Reform within the EDC.
Also , $240,000 was included in the budget to implement the work force development program at
Community
College
of
Rhode Island
and set up a system to train workers for targeted industries. The Industrial Recreational Building Authority now has
$60 million in loan guarantees, an increase of $40 million, to finance company expansions that officials have said will create about 450 new jobs.
$1 million in workforce training grant money was restored. Remember our rally back in the spring? Looks like it had an impact.
Locally, the designation of
Landmark
Medical
Center
as a rural hospital and the twelve year exemption on sales tax for the new owners goes along way towards the merger with Caritas Health Care. We all were able to breathe a sigh of relief knowing that quality care will continue along with the second largest employer in
Woonsocket
remaining in operation.
Finally on the state level, there was no broad based state tax increases, no increases in direct business taxes, no institution of combined (corporate tax) reporting, no expansion of the sales tax to services and no institution of a gross or net receipts tax.
Further, the business community was successful in blocking efforts to remove the exemption from class action lawsuits for state regulated businesses. (Something the “trial lawyers” have pushed vigorously for and a change that would cause businesses unnecessary financial harm
On the not so good side. There will be tax increases. The $165 million cut in local state aid and the elimination of the motor vehicle excise tax reimbursement will cause all communities to review their budgets again. Each community is taking different approaches including
Cumberland
where the burden of the cuts may be absorbed by a two tier tax system with a higher rate for business. However as a way to recuperate some of those funds, legist ion “allowing” local communities to tax vehicles that are valued over $500 is sure to be something that all communities will have to consider.
The chamber and its coalition partners were very disappointed that the General Assembly did not pass any legislation that would help the municipalities deal with local fiscal issues. Although cities and towns may reduce school spending by 5 percent, the so called “Tool Box” many cities and towns needed including mandatory minimum health co-pays for municipal
employees, unfunded mandates, suspension of the so-called Caroulo Act in years that state aid to municipalities is less than the prior year, and removal of minimum staffing provisions from collective bargaining agreements, is not enough.
Finally the uncertainty of including in the budget $100 million in government funding by way of additional federal Medicaid (MCAP) support, despite a “safety valve” measure that would trigger cuts by the Governor if the money is not received, will be watched by many.
Thanks to David R. Carlin III, the Chamber’s Vice President of Government Affairs for his help in compiling information for this article.
To find out more about the Chamber visit our website at www.nrichamber.com
John C. Gregory, IOM is President/CEO of the
Northern RI
Chamber of Commerce. He can be reached at jgregory@nrichamber.com
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