McKee will seek to improve business climate in fiscal 2023 budget

Updated at 6:32 p.m.

GOV. DANIEL J. MCKEE said he will be including help for small businesses, and $10 million for minority-owned businesses from $1.1 billion in American Rescue Plan Act funding, in his fiscal year 2023 budget./PBN FILE PHOTO/CASSIUS SHUMAN

PROVIDENCE – Gov. Daniel J. McKee on Tuesday said he will be including proposals in his fiscal 2023 budget to improve the state’s business climate, including giving small businesses more access to capital, reducing governmental red tape and increasing the number of minority-owned businesses.

McKee discussed the business-focused proposals, including $10 million for minority-owned businesses, in his state-of-the-state address at the Statehouse on Tuesday. He is expected to unveil his budget on Jan. 20.

“Small businesses make up not only a crucial part of our economy but also our identity, we are truly a small-business state,” said McKee in a statement. “As a former small-business owner, I know firsthand the time and resources it takes, and I am pleased that the targeted initiatives announced today will make it easier and simpler to do business in Rhode Island.”

McKee said he’ll propose:

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• Reducing the corporate minimum tax to $375.

• Eliminating the sunset provision for liquor to-go, permanently allowing restaurants and brewpubs to sell alcoholic beverages with take-out food.

• Reforming tangible taxes by allowing cities and town to exempt a portion of business property from the tangible tax without seeking individual exemptions from the General Assembly.

• Reducing the interest rate on delinquent tax payments from 18% to 12% for non-trust fund taxes, bringing Rhode Island in line with Connecticut.

• Creating the position of a Taxpayer Steward within the Rhode Island Division of Taxation. The Taxpayer Steward would guide both small businesses and individuals through the taxation process.

• Providing an exemption from sales tax for the trade-in value of motorcycles. Under current law, an exemption is provided for only private passenger automobiles not used for hire.

• Allowing home-based cottage food production for nonfarmers. The proposal permits home-based production of baked goods that do not require refrigeration or time / temperature control for safety. Currently, Rhode Island is the only state in the country that restricts cottage food licenses to farmers.

• Expanding the types of financial institutions eligible to apply for the Small Business Development Fund, a tax credit program adopted by the General Assembly in 2019.

McKee’s budget proposal will also include a legislative package to simplify the process of doing business in Rhode Island by reducing outdated and outmoded laws still on the books in the state. No details have yet been disclosed regarding the legislative package.

The Minority Business Support Initiative will involve:

• Increasing access to capital through grants and low-interest loans to minority entrepreneurs and minority-owned businesses to start and expand their businesses.

• Providing technical assistance to minority-owned businesses seeking to improve things ranging from customer-facing marketing strategies to back-end office functions.

• Building capacity and supporting the associations and nonprofits that are key to strengthening our state’s minority-owned business community.

• Building out physical space for these activities to occur.

“For far too long, minority entrepreneurs and minority-owned businesses have faced barriers in starting and growing businesses,” said McKee. “They’ve had more hurdles to jump to get over that finish line. That is why my budget proposal includes the Minority Business Support Initiative, to help reduce those hurdles.”

Commerce Secretary Stefan Pryor said, “Our economy is showing strong signs of recovery out of the COVID crisis, but significant challenges remain. By expanding access to capital, reducing burdensome taxes and removing unnecessary restrictions, the measures proposed by Gov. McKee will make it easier for small businesses to operate, and to thrive, in our state.”

House Minority Leader Blake A. Filippi, R-New Shoreham, said, “Rhode Island needs to take dramatic action to empower our small businesses to thrive. At first glance, some of these proposals have merit, and we look forward to further detail.”

(SUBS last paragraph with GOP comment.)

Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com. You may also follow him on Twitter @CassiusShuman.

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