Improved business climate positions R.I. for growth

HOPEFUL OUTLOOK: House Speaker Nicholas A. Mattiello, D-Cranston, is seen in his office at the Statehouse. Mattiello says Rhode Island's economic health is improving. / PBN PHOTO/MICHAEL SALERNO
House Speaker Nicholas A. Mattiello, D-Cranston, is seen in his office at the Statehouse. / PBN FILE PHOTO/MICHAEL SALERNO

The past two state budget cycles focused on making Rhode Island more economically competitive among New England states, according to House Speaker Nicholas A. Mattiello. The 52-year-old Cranston Democrat wants to see Rhode Island get “in the game” in attracting businesses to the Ocean State.

How much of a role should government take in attracting business investment? The most recent budget focused on economic incentive programs, rather than tax reform. Was this appropriate?

The reason why we looked at incentives, in the last budget, is comparing Rhode Island with other states, other states had greater incentive packages. If you’re not in the game, you’re not going to attract businesses into your state. Generally speaking, government’s role is to create an environment that’s conducive to economic development and job creation. The government has to be administered efficiently. Our regulatory process has to be as efficient as possible so businesses can concentrate on conducting their business, creating jobs, getting their products to the market, getting their services to the market and not necessarily dealing with government burdens.

Have these incentives had any impact yet, or is it too early to say?

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I don’t think these incentives are any kind of a magic bullet. What they do is make Rhode Island competitive with other states. The important factor to consider, regarding Rhode Island’s business climate, is not the incentives we just created. Those are appropriate and they make us competitive, but you have to look at our last two budgets. In the 2015 budget, we reduced our corporate tax rate from 9 percent to 7 percent. We went to combined reporting. We increased our exemption on the estate tax from $921,000 to $1.5 million. We just eliminated Rhode Island state tax in the 2016 budget for Social Security recipients. We also eliminated sales tax on utility bills. We reduced the minimum corporate tax from $500 to $450. That puts us between Massachusetts and Connecticut. If you look at what we did in the last two budgets, we are much more competitive than we were. We have a much better tax climate and economic climate. It’s being recognized. Rhode Island is starting to be viewed more positively.

Does Rhode Island remain uncompetitive?

The climate has changed. I think we’re moving in the right direction. Unfortunately, we’re still not moving with the same momentum that some other states are moving. We’ll keep at it. Government can’t micromanage the economy and should not try to micromanage the economy. We don’t create jobs. Government creates the environment for job creation and at some point, you almost have to get out of the way and let businesses do their work.

How important, in the scheme of things, is keeping the Pawtucket Red Sox in Rhode Island?

I don’t believe any one corporation is necessarily critical, but the PawSox have a lot of good will in Rhode Island. We get a lot of economic activity out of the ballpark. The proposed move to Providence would have served as a catalyst for the area. It would have brought 5,000 to 10,000 people into Providence. When you’re looking at our overall economic environment, companies like vibrant communities. Companies with dynamic, young workforces are going to relocate to communities that have a lot of activities. The PawSox [move] was also an activity that would help draw companies in. By themselves, I don’t think we can say, all of a sudden, we transform our state or capital city. But it’s one piece of the puzzle. You bring in the PawSox, bring in other activities, and before you know it, you have a vibrant, growing, active community that businesses want to come to.

Some people had criticized that proposal as creating an amenity, but not necessarily higher-wage jobs.

It creates the environment for the high-paying jobs. We don’t have a menu that you can just go to, and peel off high-paying jobs. You have to create the environment. I look at the PawSox more as an attraction that creates a more vibrant community that the high-paying jobs want to go to.

RhodeWorks, the proposed highway truck tolls, places the burden for improvements on trucking concerns. Is this fair?

I’ve been very consistent. Our infrastructure, overpasses and bridges are rated the worst in the country. That’s absolutely unacceptable. We have to look at a plan that is going to substantially improve our infrastructure. I like the concept of the toll proposal that is before us because it tolls the heavy trucks that create a lot of the damage, and a lot of the burden for the repair of our bridges, overpasses and infrastructure is passed on to out-of-state truckers that come through here and cause the damage. Tolling the heavy trucks, at least half of the cost gets split with out-of-state truckers. It lessens the burden on Rhode Island taxpayers.

The idea of shifting some of it, to, say a gasoline or a diesel increase, does that make any sense?

The tolling proposal raises our gross state product the most, it creates the most jobs and it doesn’t impose as significant a burden on Rhode Islanders. We asked for an economic-impact study. We got one through [Regional Economic Models Inc.]. It seems the tolling proposal is best for the economy. A lot of the cost gets shifted to out-of-state truckers.

Do you anticipate the General Assembly voting on this issue this next session?

We anticipate something going through. We’re working more on the details. I’m looking at the avoidance issue, and the traffic counts. We’re giving that serious consideration. … With big proposals, you have to look at it deliberatively.

Any regrets about how that has been handled, in terms of the speed of the review?

We’re talking about borrowing a half-billion dollars. Whenever you have a proposal of that significance it’s incumbent on us to be deliberative. It’s a big proposal. You have to get it right. You have to vet it. You have to consider all aspects of the proposal. There are issues that people are bringing forth, on a daily basis. We study them, we look at them as best we can. Hopefully the final product will be somewhat better considering all of those issues. It is our duty to be deliberative. I will not rush something of that significance.

What is your view of 2015 in Rhode Island in terms of the state’s economic health?

The economic health of the state is improving. We’re not exactly where we should be or where I want to be. But the real estate market is improving, according to what the Realtors are telling us. Lenders are lending more money than they have before, that tells you projects are getting underway. There’s a sense that Rhode Island is moving in the right direction. Sometimes that creates its own reality. Hopefully, a lot of these incentives we’ve created give additional incentives to companies to come in, invest in Rhode Island, and create jobs. And have some of our Rhode Island companies reinvest and create more jobs.

What do you see for 2016 in terms of Rhode Island’s economic health?

I’m hopeful our economy continues to improve and the standard of living for our taxpayers continues to improve, and that the momentum we’ve built on continues to grow in the right direction: That Rhode Island will once again be competitive in the region.

What one thing would you like to see happen in Rhode Island in 2016?

I would love to see, and I expect to see, our economy to continue to grow and job creation become more robust. I would also love to see Rhode Islanders begin to look at the glass as being half full. We have a beautiful state. We have a great coastline, great tourist attractions, great universities and great hospitals. It’s a wonderful place to live. Rhode Islanders, for a whole host of reasons, don’t necessarily appreciate the greatness of Rhode Island. •

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  1. Rhode Island should fund the repair of its bridges and roads by reducing its tax on gasoline and diesel fuel to 20 cents per gallon. Many vehicles that now pass through RI would stop and buy their fuel in RI because RI would have the lowest fuel prices in New England. Many nearby Massachusetts and Connecticut drivers would buy their fuel in RI. Local truck stops and gas stations, located near Interstate highway ramps, would expand and improve their facilities to attract customers. Employment at RI’s fueling stations would increase. The number of gallons of fuel sold in RI each year would more than double which would produce the equivalent of over 40 cents per gallon in fuel taxes based on today’s yearly sales of fuel.