Redirecting state funding can spur economic development

By Patrick Anderson
PBN Staff Writer

Since finishing fourth in a 2010 bid for governor, Sympatico Software Systems President and Moderate Party founder Ken Block has remained an active presence in the Rhode Island political arena. This year, Block is working with fellow business leaders in the Smaller Business Association of New England to develop and promote an economic-policy plan for the state. The plan, which Block and other SBANE members are pitching to elected officials this winter, calls for a series of economic-development and education reforms to spur growth. The SBANE plan would redirect state English-as-a-second-language funding to economic development, investigate use patterns in unemployment insurance, potentially eliminate the state temporary-disability insurance program and exempt new investments in Rhode Island companies from capital gains tax. The education ideas include increasing instructional time, reducing teacher absence and moving the start of teacher contracts away from the beginning of the school year. More

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NEWSMAKERS

Redirecting state funding can spur economic development

COURTESY KEN BLOCK
ALL IN? Ken Block, president of Sympatico Software Systems, hasn’t ruled out another run for governor in 2014, but says that he has no interest in running in a “three- or four-year campaign.”

By Patrick Anderson
PBN Staff Writer

Posted 1/7/13

Since finishing fourth in a 2010 bid for governor, Sympatico Software Systems President and Moderate Party founder Ken Block has remained an active presence in the Rhode Island political arena. This year, Block is working with fellow business leaders in the Smaller Business Association of New England to develop and promote an economic-policy plan for the state. The plan, which Block and other SBANE members are pitching to elected officials this winter, calls for a series of economic-development and education reforms to spur growth. The SBANE plan would redirect state English-as-a-second-language funding to economic development, investigate use patterns in unemployment insurance, potentially eliminate the state temporary-disability insurance program and exempt new investments in Rhode Island companies from capital gains tax. The education ideas include increasing instructional time, reducing teacher absence and moving the start of teacher contracts away from the beginning of the school year.

PBN: Is there a unifying theme behind these proposals?

BLOCK: What we are trying to do is define the problem Rhode Island is experiencing right now and then propose solutions. Rhode Island’s economic [and] educational problems are linked in many ways. Employers have a challenge when their employees don’t want to send their children to public schools. I know several business owners who are leaving the state not for tax or regulatory problems, but because their employees would rather their children attend Massachusetts schools. Rhode Island lacks an overriding economic-development plan that brings together tax, regulatory and spending policies. And we have a reputational problem. Too many people who don’t live in this state look at Rhode Island as not a good place to do business. So we have asked the governor’s office and legislative leaders to evaluate any law or regulation by evaluating its impact to the unemployment rate, its impact to business competitiveness and its impact on GDP.

PBN: More than any other agency, the SBANE proposals really put a spotlight on programs in the Department of Labor and Training. Why?

BLOCK: We dove into the Department of Labor and Training because it touches all businesses in the state and we believe there might be some systemic problems. The first is with the Job Development Fund, where the purpose is to spend money to make our GDP go up. It turns out, of the $12 million it takes out of Rhode Island businesses annually, very little of that is spent on job development. Close to $4 million is spent on teaching English as a second language and we don’t feel it is doing much to incentivize economic development. … We have plenty of people who speak the language who don’t have jobs right now.

PBN: What problems do you see with the Temporary Disability Insurance program?

BLOCK: Rhode Island is one of the only states that mandates temporary-disability insurance for all workers. It is a very expensive insurance policy and a 1.2 percent tax up to $60,000 annual gross income. For a worker who makes $60,000, they pay a $720 mandatory tax for TDI insurance. That is very expensive. What are we doing and why do we mandate it when other states don’t? We are an outlier. While it is an employee, not an employer-based, tax, I think it makes us less competitive at the end of the day.

PBN: How would we pay for exempting capital gains?

BLOCK: The capital-gains proposal has no short-term cost – because you can’t realize a capital gain until you have held onto it for three years – and little long-term cost, because most Rhode Island businesses are not set up for a quick resale. Fifteen years ago, New Hampshire did something like this and got a bunch of businesses to jump across the border from Massachusetts to take advantage of the capital- gains tax exemption. These are your high-flying companies with a lot of funding behind them.

PBN: What is SBANE doing to get these ideas into the minds of lawmakers?

BLOCK: We have met with the governor’s policy staff. We have met with the speaker’s policy staff and Senate president’s policy staff. We have met with Senate finance and will be meeting with House finance. … We are going to have a forum where we will be inviting legislators and other elected leaders to come interact with us and tell us what they think about it. … Our hope is we can really rally the business community around advocating things that will put Rhode Island in a better position.

PBN: Sympatico Software Systems has been investigating fraud and waste in state social welfare programs this year, when will we see the fruits of that?

BLOCK: There is a report coming. I am personally putting the finishing touches on it now.

PBN: Has anything you have learned from that gone into the ideas that SBANE is promoting?

BLOCK: The work that we are doing has been in social-service programs and doesn’t apply to any of this at all. And all the work I am doing for the state is covered by a strict confidentiality agreement.

PBN: Are you running for governor in 2014?

BLOCK: At this point I am not. It is early still. I find the idea of a three- or four-year campaign abhorrent. •

INTERVIEW

Ken Block

Position: President of Sympatico Software Systems

Background: Block worked in software development at companies from Wall Street, to Bank of New England and GTECH before founding Sympatico Software Systems. He founded the Moderate Party in 2009. He became the party’s first gubernatorial candidate in 2010, finishing fourth, with 6.5 percent of the vote.

Education: Bachelor’s degree from Dartmouth College in computer science, 1987

First job: Movie-theater usher

Residence: Barrington

Age: 47

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