Rhode Island Becoming a Better Place for Business
Tuesday, July 06, 2010
Well, those days could be behind us.
The latest issue of Chief Executive magazine says the business climate in the Ocean State is getting better. The state still has a ways to go, but it did rank number 39 among the 50 states, based on a survey of 651 CEOs across the United States.
Rhode Islanders also may take some comfort in knowing that both Massachusetts and Connecticut were lower on the scale. The Bay State was fifth worst, while Connecticut was ranked 45. Texas topped the list, while California was dead last.
It’s a bit of good news for Rhode Island, but one business expert says the Ocean State may get even higher on the ranking thanks to a new law that slices the top income tax rate from 9.99 percent to 5.99 percent. “So probably we’re a little bit more competitive—we’d be a little higher,” said Ed Mazze, a professor of business administration at the University of Rhode Island.
The 50 states and Washington, DC were ranked in three categories: taxes and regulation, workforce quality, and living environment. Rhode Island got a passing grade of a C in the last two areas, and a D+ for taxes and regulation—a grade that was given before the new tax law could take effect.
Mazze warned that Rhode Island is at risk of falling lower in workforce quality. One reason is an annual decline in state funding for state university, colleges, and community colleges, according to Mazze. But the K to 12 school system is also on the rocks, he said, pointing to places like Central Falls.
When it comes to living environment, however, he said Rhode Island should be doing a lot better than a C. “Usually people say Rhode Island’s claim to fame is quality of life,” Mazze said. “That’s a disappointing grade.”
The coast, rural communities, proximity to big cities like Boston and New York City, and having its own airport are all things that should put Rhode Island above other states, according to Mazze.
As for taxes and regulation, state leaders can choose to make Rhode Island even better, Mazze said. “The Legislature is attempting to be more business friendly,” he said. “The problem is, they’re doing it with a bunch of smoke and mirrors.”
While the Legislature did cut taxes, he faulted it for not doing enough to lighten the weight of regulation on businesses. And, he said the $7.8 billion budget it passed already has a $100 million deficit due to the expected loss of some federal Medicaid funds.
So Rhode Island may not have the unhappy distinction of being in the bottom ten, but it still has its work cut out for it in making it closer to the top. “The states at the top are going to continue to attract and support business and Rhode Island will have an even harder time climbing,” Mazze said.
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