While many of Rhode Island’s politicians declare the state’s business environment improving and more attractive, some business leaders say government simply hasn’t done enough and outside our borders, the state’s image remains anti-business.
Lack of leadership, sub-par education, high taxes, labor problems, a “less attractive government environment,” are what contribute to Rhode Island’s poor business image, according to some of the inductees into the University of Rhode Island’s first class of the College of Business Administration Hall of Fame.
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Sitting at a roundtable discussion with the Providence Business News before the induction ceremony on April 24, the inductees reflected on Rhode Island’s business climate.
Asked about his perception of the state’s business climate, Vincent A. Sarni, retired chief executive officer and chairman of PPG Industries and a 1949 graduate of the former Rhode Island State College, said that from his view “frankly it hasn’t been competitive.
”We’ve had over the years here, less attractive government, we’ve had labor problems, less attractive labor market, and a tax situation that was not as favorable as other places,” said Sarni, who was raised in Cranston. “Over the years it hasn’t been a competitive area. All you have to do is look at the businesses that are here. They have been here forever.”
Alfred J. Verrecchia, executive vice president of Hasbro, said the business climate is not changing quickly enough in Rhode Island.
”Certainly if you go back a few years you could look at the recent legislature as being more business oriented than they have in the past,” Verrecchia said. “But taxes are still a disincentive in the state of Rhode Island. It’s not as much an impediment as it was before, but it is not a catalyst for business business wants to flourish, reaching out, providing new jobs.”
Here’s how the inductees responded to other issues:
Taxes
Verrechia: “The tax structure in Rhode Island is not competitive – in the region – I won’t even go out to places like the Midwest or Southwest. Let’s just take the New England region. Our tax structure is not competitive with Connecticut. It’s not competitive with Massachusetts.”
Referring to proposals to replace the state’s piggy back income tax with a flat tax for individuals with incomes over $175,000, Verrecchia said: “You’re a high income earning, and you talk of the high marginal tax rate and get criticized. The fact of the matter is the minute you take away the half a dozen people who are running big corporations, there are an awful lot of people in Rhode Island who are earning more than $200,000 Or, if you’re going to start a business, or if you’re a venture capitalist, to live in Rhode Island you are going to be taxed significantly more than you would if you lived in Massachusetts or Connecticut”
Sarni: “I don’t think a major company looks at Rhode Island and says because our top four or five executives are going to be taxed to a greater degree we’re not going to go therethat’s an element that is way down on the list in terms of value assessment I think it’s overall tax structure. That tax, as I understand it, is more of a punitive tax. You shouldn’t have that kind of taxing. The philosophy behind it is bad I don’t believe judgments on facility locations are made on the basis of how it affects the CEO.
Government
PBN asked if you were the sitting governor what changes would you make to attract businesses to Rhode Island?
Sarni: “I think he would have a very big job ahead of him. It couldn’t be done instantaneously, because some of the things we are talking about are obstacles in the infrastructureYou wouldn’t be able to do much without the strong support and initiative of the House and Senate You know a company that is going to make a move of that kind has got to see some continuity, so that your next governor, he’s not likely to revert. There you are with a multi-million dollar investment and then you’re stuck.”
Ralph C. Potter, a 1947 graduate of the former Rhode Island State College and former president, chief executive officer and treasurer of Potter Hazlehurst, an advertising firm: “It has to be made from the lower area of legislature up. It has been attempted by so many administrations. I go back to Pastore and he couldn’t do it. The members of the legislature have to be inclined, they have to show initiative.”
Education
Verrechia: “The education system is a disincentive for businessesIf you’re not educating students in the secondary level they are not going to be able to go out and get jobs and provide the kind of human resources that both small and big business are going to need. And that’s the problem here in Rhode Island. We’ve got some serious issues As a business person, if you had to forgo a reduction in taxes to help education, I probably would
” Things aren’t going to get fixed overnight. It takes some leadership and courage. I don’t think we should get into individual personalities. I think they’re all trying to do a good job. If you go back a few short years ago, I think when Weld was governor of Massachusetts, he got together with the legislature and said hey we’ve got a crisis here in Massachusetts, we’ve go to fix this state. And they accomplished a lot. It’s something that can be done. It takes a lot of leadership”
Sarni: “Whenever you talk about education, some people jump to the conclusion that the solution is in more taxes that’s not necessarily the solution at all. The solution is better leadership, more organization, structure, standards and performance. All of those things bring about better schools. I think that probably in this state, as in many states, some leadership that starts the school system on a qualify process that looks for performance and looks for product. Product, performance, that is to say let’s measure the students. When they get through the system here, how do they rate?
