PROVIDENCE – On Tuesday, June 2, the Rhode Island Public Expenditure Council (RIPEC) released comments on the economic development initiatives included in the Governor’s FY 2016 budget as proposed. The economic development programs and initiatives included in the Governor’s budget proposal represent an ambitious effort to improve Rhode Island’s economic climate. Among the proposed initiatives are tax credit programs, a small business assistance fund, loan and grant programs and a competitive student loan reimbursement fund. The Governor has also proposed overhauling how revenue generated by the state hotel tax is allocated to fund a statewide tourism and marketing campaign. Furthermore, the Governor proposes increasing the operating budget for the Rhode Island Commerce Corporation to funding levels that it has not received in more than a decade. The full report is available here.
RIPEC believes that the General Assembly should favorably consider the additional economic development tools and incentives proposed by the Governor to help Rhode Island state government become competitive in attracting and retaining businesses. Equipping the Commerce Corporation with tools that it can use to improve the state’s economy and providing the resources necessary to manage these programs will allow the state to create a more competitive economic climate. This year’s budget cycle, with additional financial resources available, represents an opportune time to invest in the economic capacity of the state and provide for economic growth and activity that will benefit the state and its finances for years into the future.
The Governor’s proposed economic development initiatives can be divided into two categories: programs intended to promote and stimulate large-scale hard assets and programs intended to assist small businesses. Programs in the first category include the I-195 Redevelopment Project Fund, Rebuild Rhode Island Tax Credit, Tax Increment Financing, Tax Stabilization Incentive Program and First Wave Closing Fund. Programs in the second category include the Small Business Assistance Program, Main Street Rhode Island Streetscape Improvement Fund, Innovation Initiative and Industry Cluster Grant. The Governor proposes financing many of these programs with savings achieved by refinancing a portion of the state’s existing General Obligation debt. As in RIPEC’s earlier report analyzing the full FY 2016 budget proposal, we suggest that the General Assembly consider the use of surplus funds to fund these initiatives instead.
An important consideration for the General Assembly will be ensuring that any new programs established have sufficient checks and balances to protect taxpayer investments. These checks and balances should include legislative oversight and reporting requirements that ensure funds allocated for programs are being used effectively.