Guest MINDSETTER™ Sen. James C. Sheehan: RI’s Most Business Friendly Budget in Decades
Wednesday, July 15, 2015
For years, we’ve all rightly heard — and all complained — about the fact that doing business in Rhode Island is more difficult and more expensive than in other places throughout the country. We’ve lamented our high unemployment rate. And year after year, we have been impotent in our efforts to improve that economic climate.
Now, that is changing. Speaking as one voice, the General Assembly and governor have given us a budget that takes a step — make that a leap — in the direction of making Rhode Island a good place to do business. Instead of just talking about what we should be doing, we’ve actually done something concrete. And that’s worth taking note.
Most notably, the Jobs Incentive initiative, for which I have labored with Rep. Joseph Shekarchi these past three years, has been included in the budget. If our number one priority is to get Rhode Islanders back to work, then this is the way to do it. And I am grateful that Senate and House leadership, along with all my legislative colleagues and the governor, agreed to make it happen.
The initiative provides tax credits to eligible businesses that create new jobs through 2020 and will encourage the creation of high-quality jobs in priority industries and areas. Additional incentives may be provided to communities most in need and areas located in transit hubs. The tax credits will range from $2500 to $7500. The credit will not exceed the amount of state income taxes generated by the position.
New, good-paying jobs mean employees paying income tax and buying homes, contributing to charities and spending money at Rhode Island establishments. And the money companies save as a result of the incentive is money these firms can reinvest, so they can continue to grow and continue to hire. Most importantly, it means better paying jobs for residents who want to continue to call Rhode Island their home.
But we didn’t stop there. We took another swipe at the expense of doing business in this state by eliminating the sales tax we used to charge businesses for electricity and heating fuel — giving them a significant savings. We cut the minimum corporate tax down to $450 to give businesses some further relief (I had pushed legislation to eliminate it outright). We created a $25-million I-195 "development fund" and $60 million in real-estate development tax credits over the next five years, with a $15 million-per-project cap. Lastly, we also provided an estimated $9.3 million in tax relief in the second half of the new budget year to elderly Rhode Islanders by exempting Social Security income from state taxes for individuals with incomes up to $80,000, $100,000 for joint filers.
While no budget is ever perfect, this year we’ve truly done something concrete to improve the business climate in Rhode Island. But, this is just the beginning of what we must do to make our state a place where people want to come to do business. We must not lose the momentum we started this year. When we return for our next session, job creation and pro-business legislation must continue to be our number one priority.
I look forward to continuing the fight to make the OceanState a more business-friendly state.
The author, James C. Sheehan represents District 36, including the towns of Narragansett and North Kingstown, in the Rhode Island State Senate. He resides in North Kingstown.
Related Slideshow: FY 2016 House Budget Winners and Losers
The 2016 Fiscal Year House Budget has some significant winners and losers. The budget passed on Tuesday night by the House Finance Committee now goes to the full House.
Superman Building and Job Creation in Providence
The effort to rehab the vacant Superman building and lure Citizens Bank to relocate's post-IPO corporate HQ to the City of Providence's Financial District took a big hit with the House Budget capping the real estate tax credit at $15 million per project.
Will this spark Citizens to move to Boston or Hartford?
Regional Tourism Councils
The budget strips the regional tourism councils of their state funding and consolidates the dollars at the state level with the Commerce Corp. For Discover Newport and Providence-Warwick Convention and Visitor's Bureau will take massive budget cuts (as will the smaller regional groups).
Rhode Island's Obamacare state health exchange looked dead back in January. Speaker Mattiello hinted that he wanted to disband the new structure, but like Houdini the health insurance program received funding from a new employer tax and state funding.
The House budget reduces the corporate minimum tax from $500 to $450, making Rhode Island "now between Massachusetts and Connecticut," said Mattiello.
The Finance Committee also sped up the Raimondo’s proposal to phase out the sales tax that all nonmanufacturing businesses pay on their electric, natural gas and heating fuel bills. The original proposal would have phased out the tax over a five-year period, but the committee chose to eliminate the tax all in one year. The cost to the state will be $20 million in FY 2016 instead of $4.9 million as originally proposed.
Governor's Raimondo got her wish for $25 million to develop 195 land in Providence as it was fully funded. This is a win for the new Governor and her newly appointed members of the Commission.
This funding will allow the Commission the flexibility to support proposed projects and potential tenants.
Despite promises by Governor Raimondo and Speaker Mattiello, the budget process is as cloaked and chaotic as ever.
Documents not printed.
Lack of commitment to timelines.
Little opportunity for review and discuss.
The salvation was the budget bill has the full support of both Democrats and Republicans on the House Finance Committee.
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