Rhode Island is competing with 49 other states to both attract and retain business. Without a vibrant business culture, it is difficult to envision how Rhode Island can sustain its fragile economy. I am reminded of the ending of the movie “Thelma and Louise” as our leaders appear to be aimlessly driving our state off the fiscal cliff.
I was reading the recently published Small Business Friendliness Survey report by the Ewing Marion Kauffman Foundation that ranked Rhode Island last in that category.
In addition, The Center for Freedom and Prosperity last year integrated many similar national reports, including the CNBC report that ranked Rhode Island dead last in business friendliness in each of the last two years. The center’s report displayed the Rhode Island national rankings in 53 separate line items in the following categories (with rankings):
• Tax burden – D-
• Business climate – F
• Spending and debt – D-
• Employment and income – D-
• K-12 education – D+
• Energy – D+
• Infrastructure – F
• Public sector – D
• Health care – D-
• Living and retiring in Rhode Island – F
If you question why businesses are not relocating to Rhode Island, the answer is listed in the report card above. Why would any company move to a state with this overall business climate? Unfortunately, this is the Rhode Island business brand.
Of even greater concern is that Rhode Island’s business community operates currently under these oppressive conditions.
Two months ago Ted Nesi, WPRI investigative reporter, issued a sobering report that 46,000 Rhode Islanders between the ages of 25 and 54 years old moved out of our state between 2006 and 2012. These are the prime earning years for a person and, as they left, they effectively lowered our tax base. This means that taxes, fees and other means of income generation must increase to balance the existing public budgets. The proposed toll for crossing the Sakonnet Bridge is a prime example of additional fees.
By the way, if those 46,000 Rhode Islanders reported to have left had stayed and were still looking for work, the unemployment rate in our state would be nearly 20 percent and not the 8.8 percent reported in April.
The unfunded pension liabilities for municipalities are staggering. Fifteen of our state’s 39 municipalities are 60 percent or less funded using a 7.9 percent presumed return. If a more conservative, and might I add realistic, 5 percent ROI were used, all of Rhode Island’s municipalities would be below the 60 percent threshold. If any company were considering moving to Rhode Island, it would certainly look at its financial exposure regarding these pensions and the high risk it represents.