Tag Archives for Rhode Island General Assembly

Olon Reeder’s Fix for the State’s Ailing Economy

Published in Pawtucket Times, July 11, 2014

As the 2014 General Assembly session ended, CNBC released its annual Top States for Business rankings. It was not good news for the Ocean State. According to the report’s findings, Rhode Island finished last among the 50 states for the third time in the last four years. States were ranked in these 10 categories: cost of doing business, economy, infrastructure, workforce, quality of life, technology and innovation, business friendliness, education, cost of living and access to capital.

After the release of the scathing report, CNBC senior correspondent Scott Cohn caught up with Governor Chafee in Chicago, attending a regional Democratic Governors Association conference, who gave his thoughts to the report’s outcome. Rhode Island was on an upswing with the state putting funding into education, infrastructure and workforce development.

Reviving Up the State’s Economic Engine

Yes, as Chafee noted, a Rhode Island Senate staffer says that economic development was a priority on Smith Hill this year.

Gregg Parė, the chamber’s Director of Communication, says state lawmakers agreed with Chafee’s positive assessment of the progress made to make the state more competitive. “Many important components of the Senate’s Rhode to Work action plan to improve the skills of the existing workforce as well as the workforce of tomorrow were passed by the Assembly,” he noted.

Paré notes a centerpiece of the Road to Work plan was placing responsibility for coordination of workforce development with the Governor’s Workforce Board. Legislation was passed to accomplish this, ensuring that Rhode Islanders can access the training programs they need in a timely and effective way, he said.

“Additionally, the Jobs Development Fund was exempted from “indirect cost recovery,” which had directed a portion of the employer funded program for workforce development to the state. This provides an additional $1.2 million for worker training programs,” adds Paré.

Paré detailed some educational reforms that were addressed by lawmakers this year. The Board of Education was directed to seek lower cost but equally effective high school equivalency tests to the GED, and to reinstate a hardship waiver of fees for low-income test takers. This removes a potential barrier for obtaining an equivalency which can open doors to employment opportunities,” he says. Enacted legislation also provided more time for those receiving cash assistance to undergo training programs, and to provide professional development for high school counselors to ensure they are helping students as they enter today’s workforce. Passed legislation also helps communities transition to full-day kindergarten, a proven, effective way to better prepare students for success in school.

Paré says the newly enacted budget invests in initiatives the Senate has worked on for years which will have long-term benefits for the economy. “The Senate’s 2013 Moving the Needle report recommended reducing the corporate tax, which the 2015 budget reduces from 9 percent to 7 percent. At the same time, it shifts the method of corporate tax assessment to a single sales factor, which removes a disincentive for investing in jobs and property in Rhode Island. The budget also eliminates the cliff on the estate tax, and increases the exemption to $1.5 million.”

Summing up the legislative session, Senate President Teresa Paiva Weed said: “The budget invests in Rhode Island’s future. The reduction of the corporate tax rate and increase in the estate tax threshold help to make Rhode Island more competitive. The transportation infrastructure fund invests in the state’s roads and bridges. Our many initiatives in the area of job training will help the state’s economy continue to move in the right direction. I’m very confident that those initiatives will help students coming out of schools seeking employment as well as the state’s older workforce which is seeking employment.”

We Have More Work to Do

But, while it may have been a banner your for economic development reforms, Olon Reeder, President of Reeder Associates, a Southern New England based independent public relations and multi-media communications practice, calls on Rhode Island’s lawmakers to continue their focus on economic reform in next year’s session. More needs to be done, says the small businessperson, former public official and former award-winning media personality.

With the State of Rhode Island coming up with a new comprehensive economic policy early next year, the North Providence resident recently released his suggested economic development action agenda, as how to improve the state’s long term quality of life, through investing in people, communities and small businesses.

“We are at a critical crossroads where we must overcome our negative self attitudes and start taking actions ourselves if we all want our state and our lives to become successful,” says Reeder.

In his economic platform, Reeder calls for tying lifelong education to economic growth. “Brain power is a key element driving worldwide demands and economic activity today, through the convergence of non stop knowledge, creative economy, enterprise and innovation, art-design connections, which all start with lifelong learning,” he says.

Reeder says personal empowerment creates the environment for change “Empowerment encourages, and develops the skills for, self-sufficiency, giving people the abilities and knowledge that will allow them to overcome obstacles in life or work environment and ultimately, help them develop within themselves or in the society,” he says.

Reeder observes that companies are constantly replacing full-time employees and now relying upon independent contractors, where people who once counted on a steady pay check are now being left to fend for themselves in a hyper-competitive self employed market.

Based on 2011 figures from the US Bureau of Labor Statistics, in Rhode Island, there re over 73 thousand self-employed contributing over $3 billion annually to the state’s economy. Most self-employed are hired out of necessity, are done so locally and through word of mouth. Because freelancers depend so much on self promotion to get their jobs, they must focus on the local markets, along with showcasing their diverse personal talents, marketing their skills to business owners in their community, along trying to compete with others for opportunities.

Reeder recognizes the importance of valuing our places, spaces and communities. “More than ever, people must be connected to where we live, work, play, stay and travel. People expect places and spaces they interact with daily to be vibrant, active, socially appealing, culturally stimulating and help them in improving their quality of life, especially with their physical and mental health,” he says.

Reeder notes active living communities provide opportunities for people of all ages and abilities to engage in routine daily physical activity, he says, like pedestrian and bicycle friendly design, access to intermodal transportation, mixed use development, ample recreation, walkable neighborhoods, access to fresh and healthy foods and commerce centers.

“Our economic revitalization is relevant to healthy and sustainable communities because active living communities encourage individuals to be more physically active, improving health by lowering citizens’ risk for health conditions, adds Reeder. “Active living communities create enhance quality of life, attract business and knowledge workers, and contribute to ongoing economic development,” he says.

Reeder noted that technology is a must, as people are now “required” to have 24/7 365 access to the Internet and must now communicate through social media to live, work, and transact personal activity, he calls for providing everyone with free online access “as a necessity of our 21st century lifestyles.”

Finally, Reeder thinks “Demand Driven Experiences” are necessary for not only reinventing our state’s manufacturing, but in changing our self attitudes about how Rhode Islanders see themselves, ultimately affecting expectations others may have about the perception of Rhode Island as the worst place for business.

“Because people no longer buy things for their personal benefit, they want enhancements to fulfill missing elements of their lives,” adds Reeder, noting that experiences are crucial for businesses and locations as a branding and marketing tool, especially with efforts in Rhode Island attracting people to live and travel here for our entertainment, food and lifestyles.”

“Using our experiences to effectively promote market and give an iconic brand, we must also stay true to the “real Rhode Island,” to our proud independent and working class heritage, the ethnic and cultural diversity in our state, and preserving our unique natural resources,” he says.

State lawmakers must be commended for their successful efforts to slash regulation and enact laws to make Rhode Island a more business-friendly place to operate. At press time, Reeder, a Rhode Island native, whose family has been very prominent in Southern New England for over four generations in small business, real estate, building contracting and public service, continues his efforts to get his voice heard by General Assembly leadership, state policy makers, business groups, even gubernatorial candidates.

Hopefully, they will choose to closely listen to Reeder and others who may well hold the keys to fixing Rhode Island’s sluggish economy.

Herb Weiss, LRI ’12, is a writer who covers aging, health care, medical issues, and the economy. He can be reached at hweissri@aol.com.

 

Fund the Historic Tax Credit Program

Published in Pawtucket Times, June 13, 2014

With November’s election cycle looming, state lawmakers are moving quickly to finish the people’s business. Once the session ends they will begin their political campaigns to garner votes to retain their seats. .Yesterday evening the House began its floor debate on the House Finance Committee’s $8.7 billion 2015 budget proposal. At press time, this columnist has no knowledge of the outcome. But, when the dust settles late Thursday evening, if a budget amendment to fund the HTC program is defeated or even if supporters are successful in getting one passed, the Senate chamber becomes the next battle ground to fund the tax credit program.

Last week, the House Finance Committee declined to recommend funding for this program, despite Governor Chafee’s inclusion of $52 million for the Historic Tax Credit (HTC) program in his FY 2015 Budget proposal. As a result, Grow Smart Executive Director Scott Wolf and his fellow Historic Tax Credit advocates are running a full court press to push House and Senate leadership to include funding for the popular economic-development and neighborhood-revitalization program in the 2015 Budget.

In the lobbying blitz, Wolf is telling lawmakers and everyone who will listen that the HTC program has successfully transform older cities and towns in the Ocean State, by spurring reinvestment, revitalization, and job generation. These programs provide an incentive in the form of a tax credit, to property owners to renovate old historic buildings. These state credits can be and often are paired with the federal historic preservation tax credit to renovate commercial properties.

Historic Tax Credit – Great Economic Development Tool

It’s a success in the Ocean State, too, notes Wolfe. Rhode Island’s HTC program has stimulated more than $1.6 billion of investment in more than 250 projects within less than 7 years. For every dollar the state invests, there is a more than five dollar return in economic activity based on a study Wolf’s organization, Grow Smart Rhode Island, commissioned several years ago.

Wolf adds, “The evidence that the historic tax credit makes a real positive difference can be seen on the ground in communities throughout the state – in bustling commercial properties like Hope Artiste Village in Pawtucket and along Westminster Street in Providence, in new apartments for urban workers and new affordable housing units. It can be seen in increased property tax revenues from rehabbed buildings. It can be seen in neighborhoods that have been rescued from the blight of vacant, derelict buildings.”

According to a media release issued jointly by Grow Smart Rhode Island and Preserve Rhode Island, $52 million in bond authorization remains in reserve from the total bond authorization approved in 2008 by the General Assembly for the original HTC program, which was discontinued in 2008 for any new projects but maintained for many other projects already under way at that time.

The General Assembly in 2013 reinstated the program, using $34.5 million in unclaimed tax credits from the prior program and, Wolf says, “The new program has ignited 26 new projects that will pump nearly $180 million into the Rhode Island economy, but 27 additional projects are waitlisted and in jeopardy if additional funding is not provided to sustain the program. By not including an extension of historic tax credit funding in the upcoming budget, the state risks forgoing up to $160 million in construction activity alone. Significant sales and employment taxes also will be lost.”

Preserve Rhode Island Executive Director Valerie Talmage says, “Our Historic Tax Credit program has an outstanding track record. From 2002 to 2008, it generated $1.3 billion in new private investment in Rhode Island’s real-estate economy, which resulted in 22,000 construction jobs, 6,000 permanent jobs, and total wages of more than $800 million. Our state cannot afford to shut this program down.”

Wolf added that suspending the HTC program again would be harmful because “We’d be ceding the competitive advantage provided by our world-renowned collection of distinctive historic buildings and neighborhoods to nearby states such as Connecticut, Massachusetts, Maine, and New York, each of which has ongoing and robust state historic tax credit programs.”

Finally, Wolf emphasized that another HTC program suspension would “Send a bad signal to investors and entrepreneurs about Rhode Island’s business climate and economic development credibility.”

Wolf and Talmage, together with their organization members, partners, and fellow advocates are calling on the General Assembly to “Continue the Historic Tax Credit program because it is a sound and critical investment in Rhode Island’s cities and towns and a proven job-generator and revenue producer, which our state sorely needs.”

In their lobbying Wolf, Talmage and their network of approximately 90 organizations who support the HTC program are quick to identify its positive impact. State officials will see higher state revenues through construction and other jobs generated by the HTC projects. In addition, job creation and increased employment taxes are derived years in advance of any outlay of state funding because Historic Tax Credits are not released for any enrolled project until the project is completed. Sales-tax revenues result from construction materials and other goods purchased for HTC projects also benefit the state in advance of any outlay.

Wolf and others also note that The Budget Office forecasts no fiscal impact to the state budget from the proposed $52 Million in debt service until FY ’19 because bonds won’t need to be issued until the projects have been completed and the tax credits have been claimed.

In an Op Ed in the Providence Journal, Pawtucket’s Mayor Donald R. Grebien and Central Fall’s Mayor James Diossa, support Wolf’s assessment of its impact in the state’s cities and towns. The Mayors say that their fiscally stressed communities benefit from Historic Tax Credits through increased property assessments.

Developing an Old Mill in Pawtucket

Antique Dealer and entrepreneur Scott Davis knows a good program when he sees one. The Eastside resident is planning to develop his old Fuller manufacturing mill on Exchange Street into a combination of commercial and residential space, but any state backpedaling of funding the HTC program will make it difficult to get his project off the ground.

An inquiry by Davis to Chairman Raymond Gallison of the House Committee on Finance, about the suspending of funding for HTC program resulted in an email explaining the decision. The chairman noted that a primary reason for rejecting Governor Chafee’s proposed additional $52 million HTC funding was based on the assertion that there were already sufficient funds in place in the existing program to meet current demand.

Davis disagrees. “My project, which is a rare and historically significant wooden mill built in a prominent Pawtucket city location alongside the Blackstone River is Number 65 in the queue,” he says, noting that he believes that none of the current funds in place will ever be allocated to his project.

“Financial assistance is essentially the only way that my mill project will ever be able to developed, says Davis, who notes that the cost to restore the historic structure versus the prevailing rental rate for space in Pawtucket simply doesn’t work out.

Chairman Gallison also noted that issues with tax credit brokers are a stumbling block for the program,” says Davis. “It is unimaginable that the resulting (legislative) decision] would be akin to ‘throwing out the baby with the bathwater”. If there is a problem with the brokers, Davis calls on lawmakers to fix it, but threatening so many important buildings, jobs, and resulting tax revenues in the process just doesn’t make sense to him.

Davis says that previous HTC funds have made 8 major Pawtucket projects possible. According to the Pawtucket Foundation, the tax incentives were the catalyst for $150 million in local investments that increased property values by 728 % and increased Pawtucket tax revenues by over $1 million annually.

“Keeping these historic buildings intact while awaiting funding assistance is extremely expensive and no doubt we will lose many of them if we can’t save them promptly,” predicts Davis. “ I can tell you from personal experience that just keeping my small 26,000 sq. ft. mill ‘on hold’ costs me several thousand dollars per month just for taxes, insurance, utilities, fire safety, security and basic upkeep,” he says.

HTC is No 38 Studios

Some speculate that recent headlines about 38 Studios and tax credits in general may have spooked House and Senate Leadership to back away from funding the HTC program. Ultimately, the ball is in the court of Senate leadership who must respond to the budget proposal submitted by the House. How can lawmakers fear another 38 Studio debacle when the Historic Tax Credits are only issued upon completion of the project? In other words, after construction workers have laid the last brick – only after new residential and office space is actually available.

But, Gregg Paré, the Rhode Island’s Director of Communication, says don’t expect any action in the Senate to fund the state’s HTC program this year if the House fails to act. “The Senate is in agreement on the budget with the House,” he says, noting that Senate leadership usually iron out any differences before the budget reaches the House floor.

Paré says that the Senate has only once modified the House budget proposal in decades. But, now it’s time for this legislative action to happen again this year especially if the House budget does not include funding for the HTC program.

To Wolf, Talmage, and Davis, and to municipal leaders in a number of Rhode Island’s cities and towns, it is obvious that the program works and serves as an important tool for community revitalization and economic development.

For this columnist, funding the HTC program is just the right thing to do, for the economy and most importantly, for the tax payer.
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Herb Weiss is a writer covering health care, aging, medical issues and the economy. He can be reached at hweissri@aol.com.

Raising Minimum Wage Reveals Partisan Divide

Published in Pawtucket Times, January 31, 2014

On January 28, 2014, President Barack Obama gave his 2014 State of the Union (SOTU) a whopping  6,778 word speech, calling on both Chambers of Congress to either work with him to move the country forward or forcing him to use his presidential powers to enact  policy.

“America does not stand still, — and neither will I,” the President told a jam packed Chamber.  If Congressional gridlock continues, the President warned, “So wherever and whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.”   This would be accomplished by using executive orders, presidential memorandums to enact policies if lawmakers choose not to act on.

Congress to Debate Merits of Minimum Wage

            In a little over an hour, Obama rattled off dozens of policy initiatives for Congress to consider this session, including immigration, emergency unemployment, manufacturing, trade, environment, education, closing Guantanamo Bay, closing tax loop holes, job training, family policies, and retirement savings.  But the President also called for an increase in the nation’s minimum wage to provide America’s worker’s a living wage.  With Democratic and Republican gubernatorial candidates gearing up their campaigns to take the Ocean State’s top General Officer seat, look for ratcheting up the state’s minimum wage to hotly debated throughout the nine month political campaign.

             While Obama’s push to raise the minimum wage was derailed last year by the GOP House and its Tea Party Faction, the Democratic president noted that five states have already passed laws to raise theirs (including Rhode Island).

             With corporate profits and stock prices climbing, average wages “have barely budged,” observed the President.  “Inequality has deepened. Upward mobility has stalled.  The cold, hard fact is that even in the midst of recovery, too many Americans are working more than ever just to get by – let alone get ahead.  And too many still aren’t working at all,” he said.

             The President used his speech as a very visible bully pulpit to call on States to not wait for Congressional action to raise the nation’s minimum wage, to give people a living wage.

              Until Congress acts, it is up to businesses to voluntary give their employees a living wage or State legislators to mandate an increase.  Obama urged the nation’s business leaders to follow the lead of John Soranno, the owner of Minneapolis-based Punch Pizza, who has given his employees a raise to $10 an hour.  Large national corporations, should join profitable companies like Costco, the President urged, that “see higher wages as a smart way to boost productivity and reduce employee turnover,” he said,

             Through an executive order the President announced in his SOTU address last Tuesday evening that he would ratchet up the minimum wage of federal contractors to $10.10 per hour, “because if you cook for our troops’ meals or wash their dishes, you shouldn’t have to live in poverty.”  

             “Today, the federal minimum wage is worth about twenty percent less than it was when Ronald Reagan first stood here,” the President quipped, noting that legislation to increase the nation’s minimum wage to $10.10 has been introduced by Senator Tom Harkin,  a Iowa Democrat who is retiring after serving almost 40 years in Congress, and Democratic Congressman George Miller, from California, also leaving office after 20 terms.

 Two Sides of the Coin          

            Although creating jobs will be one of the top campaign issues that must be addressed by the State’s gubernatorial candidates (Clay Pell was not available for comment by press time), look for the minimum wage issue to pop up for political discussion with the Democratic and Republican views being like two sides of a coin.

            When he announced his bid for governor, Providence Mayor Angel Taveras he told his supporters that increasing the minimum wage is a step in building an economy that supports higher paying jobs, puts people back to work and gives Rhode Island families the opportunity for a better life. There was a time when his mother worked at the minimum wage to support three children so he knows firsthand how much raising it can help a family, he stated. He is also pushing for statewide universal pre-kindergarten.

            Tarveras quoted from a recent study by the Economic Policy Institute that indicated that increasing the minimum wage to $10.10 an hour would increase the wages of 65,000 Rhode Island workers and indirectly benefit an additional 26,000 more, totaling nearly 20 percent of the work force.  He cited another study that found that moving to a higher wage would boost the national economy by as much as $22.1 billion, creating as many as 85,000 new jobs.”

            “I’m a Democrat who believes in raising the minimum wage and indexing it with regular cost of living adjustments,” noted Treasurer Gina Raimondo, in her announcement to run for Governor at Hope Artiste Village in Pawtucket.

            According to Eric Hyer’s, Gina Raimondo’s Campaign Manager, “Gina strongly believes that we need to increase the minimum wage and she was pleased to see President Obama call for increasing the minimum wage to $10.10 an hour during the State of the Union this week.  No one who works full time should live in poverty.  As the President said, it is time to give America a raise.”

             “But let’s not wait for a dysfunctional Congress to act; we can take action right here in Rhode Island,” states Hyer.

            “Gina is calling for us to take action on this now and raise the minimum wage to $10.10 by 2015 and then index it to the cost of living so that politicians can’t play games with people’s lives. Two-thirds of minimum wage earners are women so a raise would immediately help women across Rhode Island and their families, adds Hyer, noting that people are really struggling and there is an urgency to help out working families.

             But, the Rhode Island’s GOP candidates, Cranston Mayor Allan Fung and Businessman Ken Block, are not buying the Democratic candidate’s solution that minimum wage is the way to go.

             “Democrats continue to recycle bad ideas. It’s time we consider some new ones so people have the opportunity to succeed and thrive, and not rely on government coercion to dictate wages. Increasing the minimum wage will result in higher unemployment, reduced job opportunities, reduced customer spending, and will reduce net job growth because of the effect on expanding companies,” says Mayor Fung

             Mayor Fung states “At a time when we are tied for the highest unemployment in the country, we cannot put more hurdles in front of the companies we have here in Rhode Island; we need to remove them. Further, Obama Care is already hurting workers because employers are transitioning employees to part time work because they cannot afford the healthcare premiums. An increase in the minimum wage would only increase the burden on small business owners who are already working on thin margins.”

             “The real issue in Rhode Island is unemployment and getting our workforce prepared with the necessary skill set for the ever changing workforce. It is quite evident that raising the minimum wage would not solve these problems,” adds Fung.

            Gubernatorial candidate Ken Block agrees with Fung, noting in a recent statement, “”As I said the other day when it was announced that Rhode Island has the worst unemployment in the country, raising the minimum wage is a job killer.”

            Block adds, “President Obama seems to believe that government can just order the economy to improve. Republicans and Independents know that government has a critically important, but limited role in the growth of jobs. Government’s role is to regulate fairly and only where necessary, and to control its spending so people and businesses are not taxed to death. President Obama continues on the wrong track to fix lagging employment, just as the Democratic leaders of our General Assembly continue on the wrong track to fix Rhode Island.”

            But Edward M. Mazze, Distinguished University Professor of Business Administration, at the University of Rhode Island, has entered the policy debate, too.

            On the one hand, “Raising the minimum wage does not create jobs and can reduce the number of hours worked for existing workers and the number of jobs for part-time workers. There could also be an impact on the number of internships offered to high school and college students.  And, just as important, raising the minimum wage will also raise the price of products and services, observes Mazze.

             “The minimum wage is not the entry point to middle class, it is the jobs that pay over $20 an hour and have a “career” future, says Mazze, noting that Rhode Island recently increased the minimum wage.

             But, Mazze believes that the state’s minimum wage should be adjusted every number of years to keep up with inflation and other economic events.  “The best way to create living wages in Rhode Island is to prepare workers for jobs for the future, have an economic development strategy that creates jobs and attracts businesses, and have affordable housing and a fair sales, property and personal income tax program,” he notes.

             With the Rhode Island General Assembly geared up to pass legislation to make the Ocean State an easier place to do business, lawmakers should not forget their constituents who cannot pay their mortgage, utility bills, or even put food on their tables.  Until the State’s tax and regulatory system primes the economic pump to create more jobs, giving a little bit more money, say $10.10 per hour, will go a long way for tens of thousands of poor or working poor Rhode Islanders who struggle to survive.

            How can Rhode Islander’s currently making a weekly paycheck of $320 (minus taxes), receiving a minimum wage, support their families?  This is not the American Dream they were brought up to believe in.

             Herb Weiss, LRI’12 is a Pawtucket-based writer who covers, aging, health care, medical and business issues.  He can be reached at hweissri@aol.com.