The role of government and the use of taxpayer money to spur the economy took center stage at Providence Business News’ 2026 Economic Trends Summit on Jan. 22, including the complexities of government involvement in the state economy, whether on taxation or regulation.
R.I. Secretary of Commerce Stefan Pryor told the audience at the Providence Marriott Downtown that he is seeing some positive trends in the state economy but stressed the need for continued momentum.
Pryor mentioned Gov. Daniel J. McKee’s proposed “millionaires tax,” an 8.99% tax on income over $1 million that is projected to generate about $67 million in fiscal 2027 and $135 million in 2028.
Critics, including the Greater Providence Chamber of Commerce, have labeled this tax a gimmick that will have a negative economic effect and will risk pushing job creators to flee Rhode Island.
But Pryor argued that other advantages offered by Rhode Island still make the state advantageous for businesses, including a lower cost of living, a lower corporate tax rate, a tangible tax exemption and a repeal of the motor vehicle tax.
“I would rebut the assumption that there are only a few advantages we have over Massachusetts,” he said.
Pryor also noted the necessity for new revenue sources given the state deficit and cuts in funding from the federal government.
“We know we have to find new sources of revenue,” he said, adding his belief that Rhode Island can “not only compete with Massachusetts but out-compete them.”
Pryor was part of the PBN summit’s panel discussion that included Kristen Adamo, CEO and president of the Providence Warwick Convention & Visitors Bureau; David Salvatore, executive director of The Providence Foundation; and Edwin “Ted” Carr, Providence’s director of economic development.
[caption id="attachment_515034" align="alignright" width="451"]
HELPING HAND: Edwin “Ted” Carr, Providence’s economic development director, says strategic investments by local government can be critical for the economy. At left is David Salvatore, executive director of The Providence Foundation.
PBN PHOTO/MIKE SKORSKI[/caption]
Carr said the public sector has an important role at the municipal level in supporting the economy, referencing the administration’s investment in a $3.75 million sale-leaseback deal to support financially struggling WaterFire Providence.
“This is a strategic investment,” he said. “In the city, we look at the greatest and best use in how we invest our dollars and things that make sense.”
He also highlighted the administration’s establishment of a one-stop business resource center at the city’s economic development office on Westminster Street.
McKee is also calling for a total of $600 million in statewide bond referendums be placed before voters on the November ballot, including a $115 million economic development bond to expand maritime and defense infrastructure at Quonset Business Park and the 195 District to develop construction-ready sites. Pryor said $70 million in bond proposals would be dedicated to developing industrial land.
He expressed optimism about the future of manufacturing in Rhode Island, saying the development bond would address challenges such as limited land availability.
“Manufacturers want to create a plant here,” he said. “Quonset is running out of room; that is the point we are at. If we develop large assemblies of land, we’re going to find the income,” he said. “We’ve done the math. This is thousands of jobs.”
But Pryor also said the agency is making efforts to cut red tape, building on the state’s investments in streamlining development applications through a new permitting database. “We are actively searching for what we can cut and what we should reduce,” he said.
Later, an audience member raised concerns about the potential negative effects of the rent control ordinance being proposed by the Providence City Council.
Salvatore warned that rent control could “disrupt the economic vitality of the city,” in part by lowering the values of multifamily properties and pushing more tax burden onto homeowners.
The Providence Foundation commissioned a report with the Rhode Island Public Expenditure Council that concluded the way to address the housing crisis was to create more supply.
“[Rent control] policy has only been utilized in a handful of states, and it has proven to be ineffective,” Salvatore said. “It has proven to decrease the quality of life in residential neighborhoods.
“The fear that I have around rent control in Providence is that the people who don’t need it the most would benefit the most,” he said.
While Salvatore acknowledged there is a role for government to invest in things such as public transportation and he is supportive of Mayor Brett P. Smiley’s financial assistance to WaterFire, rent control is a policy Providence should avoid, he said.
“At times, we need government to step aside and let businesses do what they do best,” Salvatore said.
