Strengthening Rhode Island’s Business CommunityMay 03, 2017
Michael L. Hanna, CPA
As a Rhode Island company with local clients and local employees, we would be the first to assert that the Ocean State is a great place to live and work. That said, we also recognize that there is always work to be done. This is the first in a series of articles that will examine Rhode Island’s business community and attempt to spotlight the state’s strengths, challenges and opportunities to improve.
Business leaders look at a variety of factors when they decide where to launch, expand or move their companies. They want to offer their employees a rich and fulfilling lifestyle in a place that entices their employees to settle and raise families. These companies need to address diverse interests; from arts and culture, to unique dining and shopping, to education and safe communities. They desire robust cities within driving distance to oceans, mountains and/or lakes. Finally, they want to work in an affordable location to operate to their maximum levels of efficiency while allowing their employees the quality of life they want and deserve.
Rhode Island offers much of what these business leaders are looking for. The state’s vibrant neighborhoods, arts and cultural scenes, world-class restaurants and equal proximity to both the tranquility of oceanfront communities and the exciting bustle of life downtown make it an attractive place to live and establish themselves. Plus, Rhode Island is flush with high-quality colleges and universities. From state schools like Rhode Island College and University of Rhode Island to well-known Ivy League and private institutions such as Brown University, Providence College and Rhode Island School of Design, these schools bring tens of thousands of young students to the Ocean State every year—students who, in an ideal world, will stay in Rhode Island after graduating and bring their talents into the local workforce.
Indeed, living and working in Rhode Island certainly has its advantages. However, Rhode Island also has its fair share of challenges for both emerging students and potential businesses—and those challenges start with the cost of doing business.
New England is among the country’s most expensive geographic regions in which to live, so it is understandable that Rhode Island has a higher cost of living than the national average. The state also has a higher per capita cost, and, due to our population and demographics, the cost of running the state has become the responsibility of a relatively small segment of taxpayers. Additionally, the state’s electricity costs are the fourth-highest in the country, according to the U.S. Energy Information Administration—nearly 50% higher than the national average. These higher-than-average costs can make it difficult for Rhode Island to attract new businesses and retain its existing ones.
Rhode Island recognizes these issues and our business community and elected leaders are working together to develop innovative ways to maximize our advantages and make the state more business-friendly. Rhode Island Governor Gina M. Raimondo’s office, Rhode Island’s elected officials, business leaders and policymakers have spent the last several years continuously promoting Rhode Island as an attractive place for companies to set up shop, create jobs and contribute to the local economy.
We have invested resources to support both the Rhode Island Commerce Corporation and statewide tourism efforts, selling Rhode Island not just to potential summer vacationers, but to entrepreneurs and business leaders looking for a new home. We’ve expanded state-funded workforce development programs, incentivizing local businesses to stay (and grow) in Rhode Island—giving workers opportunities to launch their careers by earning both invaluable industry experience and living wages.
Additionally, for businesses already located in the Ocean State, Rhode Island General Treasurer, Seth Magaziner, recently announced “Bank Local,” a community deposit program which will move millions of dollars traditionally deposited in large national banks, to local banks and credit unions. Bank Local will support loans up to $250,000 to small businesses employing 100 or fewer employees and doubles the support to women and minority businesses.
And, as evidenced by recent decisions by companies like General Electric, Johnson & Johnson and Virgin Pulse to bring jobs to Rhode Island, these strategies are working. We’re making great progress.
With great progress comes the ability to envision “next steps.” Two areas that the state must address are educational development and structural deficits. The jury is still out on the Governor’s plan for two years of free tuition at any state public college; however, the discussions on the plan have helped bring the need for an educated workforce into focus. Whether the state concentrates on K-12, secondary, or postsecondary education, resources need to be directed to this effort.
Although Rhode Island is the smallest state by land area and the 8th least populous, we have 39 cities and towns, all with separate administrative costs, contributing to the state’s structural deficit. The solution involves taking a serious look at the consolidation of cities and towns, which could either decrease costs or provide us with the ability to redeploy those assets across our communities at the service line level.
If Rhode Island wants to compete both regionally and nationally for new businesses (and new jobs that come with them), we must continue to work together to ensure that Rhode Island delivers a competitive tax environment and a trained labor force, as well as governmental processes and an infrastructure that supports our state’s economic development.
Part two of our series will focus on the adjustments that have been made to our tax structure to entice businesses to stay and expand, as well as processes promoting a business-friendly culture to lure new businesses to our state.
How BlumShapiro Can Help
BlumShapiro is the largest regional business advisory firm based in New England, with offices in Connecticut, Massachusetts and Rhode Island. The firm, with over 400 professionals and staff, offers a diversity of services which includes auditing, accounting, tax and business advisory services. In addition, BlumShapiro provides a variety of specialized consulting services such as succession and estate planning, business technology services, employee benefit plan audits and litigation support and valuation. The firm serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies.