Lobbyists for Rhode Island manufacturers are strongly pushing three bills in the General Assembly aimed at reducing taxation of manufacturers, lowering health care costs and putting extra money in the hands of manufacturers to help them ride out the recession.
“Our members make the most noise about taxation, energy costs and health care costs. Those are the issues that are really impeding our members the most and what we most need to change, and that’s what we’re focusing on,” said John J. Grady, executive director of the Rhode Island Manufacturers Association, a lobby group advocating for the three bills.
Double-weighted
sales factor bill
With the state’s current perilous fiscal condition as the driving force, Grady said RIMA has thrown its weight behind the Double-Weighted Sales Factor Bill. If passed, the legislation would permit certain manufacturers to reduce the state tax paid on a company’s property and payroll, with a more heavy taxation of the company’s sales.
“We don’t want to penalize manufacturers for hiring more people and investing in their property and infrastructure,” said Grady. If the double-weighted sales tax legislation is passed, said Grady, manufacturers would be “taxed on their sales, what their making, rather than being taxed for investing in Rhode Island.”
Senators William Irons, David Bates, Susan Sosnowski, Michael Lenihan, and John Celona introduced the bill, officially named S-789, on Feb. 26. The bill was referred to the Senate Finance Committee.
This act would take effect upon passage. If successfully implemented, RIMA would be in a better position to push for further legislation would create a single-weight sales factor once the economy improves – a move that will significantly enhance benefits to manufacturers, said Grady.
Small employer health
insuranceavailability act
This legislation was written by RIMA and is filed at the General Assembly as S-813. The bill would allow RIMA to establish a purchasing group that would offer discount rates on health insurance to all of its members in Rhode Island, said Grady.
Currently, Rhode Island law does not prohibit the formation of purchasing groups that would give companies the ability to negotiate pricing advantages resulting from several employers collectively purchasing through a single source. But Rhode Island underwriting regulations require small-group carriers to spread financial risk across the carrier’s entire small-group population. This effectively means that separate risk pools are not permitted, and any advantage one could gain from setting up a group purchasing arrangement is negated.
“It was written by us, and we had it introduced by Senators Daniel Connors, Paul Fogarty, Theresa Paiva-Weed, Daniel DaPonte, and Roger Badeau on Feb. 26,” said Grady. “Health care cost have gotten so extreme that it really is affecting the bottom line in manufacturing.”
The act, which was referred to the Senate Committee on Commerce, Housing & Municipal Government, would take effect on July 1.
Net operating loss bill
The Net Operating Loss Bill would amend one part of the existing Business Corporation Tax, to allow manufacturers to carry forward net operating losses. Net operating losses allow manufacturers to deal with economic down cycles by providing the ability to recapture losses against income taxes in previous years and carrying those losses forward for 20 years.
This initiative puts capital in hands of manufacturers, which helps prevent layoffs, allows manufacturers to invest in areas such as research and development, and reduces the need for borrowing, said Grady.
“This one has been kicking around for a couple of sessions. It seems to have some legs this year, it might be passed,” said Grady. “It’s a pretty high priority, especially now that times are tough. There are manufacturers running at a loss right now, and this will help them survive.”
The bill, H-5552, was introduced by Representatives Fausto Anguilla, Henry
Rose, Jan Malik, Raymond Gallison, and John Shanley on Feb. 11, and referred
to the House Finance Committee. The act would take effect upon passage.
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