2019 Rhode Island Small Business Economic Summit

Unseen by most Rhode Islanders, the Rhode Island Small Business Economic Summit (Summit), an annual meeting between the business community and our state’s elected officials, is one of the most influential gatherings of the year. The 13th annual Summit was held on the Bryant University Campus on Friday morning. “I want to acknowledge the recommendations from the Summit that have

January 13, 2019, 8:54 pm

By Steve Ahlquist

Unseen by most Rhode Islanders, the Rhode Island Small Business Economic Summit (Summit), an annual meeting between the business community and our state’s elected officials, is one of the most influential gatherings of the year. The 13th annual Summit was held on the Bryant University Campus on Friday morning.

“I want to acknowledge the recommendations from the Summit that have been implemented in the past,” said Grafton HCapWilley IV, a CPA and the managing director of the accounting firm CBIZ Tofias. ‘Cap’ Willey was addressing a room full of business leaders, lobbyists and legislators, including Senate President Dominick Ruggerio (Democrat, District 4, Providence) and Speaker Nicholas Mattiello (Democrat, District 15, Cranston).

‘Cap’ Willey started his list: “These include personal income tax reform, creation of the tax policy office in the Department of Revenue, state pension reform, property tax cap, corporate tax reform, estate tax reform, the repeal of franchise tax, increasing the direct expenses provisions to match federal limits, reducing minimum tax reporting dollars, enacting some property tax reform, car tax, providing tax relief for retirement income, we’ve also held the line on broad based tax increases, we fought back efforts to impose binding arbitration on labor agreements…”

“All these actions are important, and they got their start out of this Summit,” concluded ‘Cap’ Willey. “It tells us that you’re listening to us, and we need to make sure there’s no backpedaling on those gains.”

“[M]y priorities are generally jobs and the economy and moving our state forward and lessening the burden on our citizens,” said Speaker Mattiello addressing the audience. “[L]et’s see what ideas I get from the [Summit this year] because we always get good ideas out of this event. That’s why I’ve never missed it. I look forward to it and I look forward to the collaboration and the ideas that we can bring back…”

It was the first time Senate President Ruggerio attended the Summit.

“Obviously we’re interested in building a partnership and continuing our partnership with this group and to move our economy forward,” said Ruggerio. “I think we’ve done some great things in the past four years as far as cutting taxes and… increasing our revenue…

“Over the past few years we’ve done some good things, I think, as far as assisting businesses in the state,” continued the Senate President. “We got rid of 2700 pages of outdated regulations, and we reduced a lot of the taxes, the income tax, the corporate tax went from the highest rate in New England to the lowest rate in New England. We reduced that 20 percent. Obviously we increased the estate tax exemption, and we removed the cliff provision on that particular exemption. We reduced the unemployment tax and reduced the tax on energy for businesses. And obviously, I know the Speaker loves this and I do also, we’ve phased out the onerous and regressive state car tax.”

Streamlined and Supercharged

This was the 13th year that Bryant University hosted the Summit. The event was smaller than in years past, but expect it to be more, not less, impactful. Construction forced the Summit to move to a smaller on campus venue. President Trump’s shutdown in Washington cost the event the co-sponsorship of the Small Business Administration.

Also, the Summit has been streamlined.

“We’ve changed the format this year,” said ‘Cap’ Willey. “Usually we had all the general officers, Governor, Lieutenant Governor, Secretary of State, State Treasurer, and sometimes the Attorney General. We decided this year that we would limit it to the Speaker and the Senate President. The work is to set a small business agenda of legislative actions by the General Assembly. That’s where the work is going to be done and we will try to avoid the political grandstanding that invariably took place under the older format. We think this will be a more productive session.”

A leaner Summit also means that the event has been supercharged, in a sense. 26 legislators were seen by me as being present at the Summit or mentioned as being present by Speaker Mattiello and Senate President Ruggerio. With just about 120 people in attendance, that means around 20 percent of those attending the Summit were legislators.

The Summit meets in the morning with presentations and a keynote speaker, then breaks into committees to generate short presentations full of ideas for our legislative leaders to turn into legislation. These ideas are then presented to our elected officials. But the Summit doesn’t just generate ideas, it develops business warriors who are prepared to support legislators who grant them favors with campaign cash.

Campaign Cash

“We need to have small business involved at all levels of the process,” said ‘Cap’ Willey. “You need to stay connected and involved. Get to know your elected officials. Tell them your concerns. Know what their positions are on the various issues and remind them of your concerns.

“There are large [factions] in the General Assembly that have no idea what it is to do payroll and to run a business, and they’re making decisions for you,” continued ‘Cap’ Willey. “They need to be educated. Representatives and Senators that do support economic growth need to be supported. That means support financially. I often tell people… This is not a battle. This is a war. We’ll win some battles, we’ll lose some battles, but the war will continue, and we have to stay involved.”

Echo Chamber

The Summit sets the agenda for the entire state business community because the ideas become part of the business community echo chamber. John Gregory, President of the Northern Rhode Island Chamber of Commerce, explained the process: “One of the interesting things that does happen is not only are the recommendations that come out of this [Summit] listened to by the General Assembly, but by other business groups throughout the state. Could be Chambers of Commerce, or again, we have a lot of the members of the Rhode Island Business Coalition here today. So one of the things that makes us great is that we develop pretty much a common agenda so there is – where there might not be the most formalized voice for business at the State House, I think they keep hearing a lot of the same issues coming from different places. So I think that’s very very important for all of us.”

Business Demands

So what are the legislative marching orders this year? Of the seven Summit committees that presented ideas, I’ll just focus on ‘Cap’ Willey’s Tax and Budget Committee. You can watch the presentations of all the committees in the videos below.

“We oppose any broad based increase in taxes,” said ‘Cap’ Willey. “We support more control on state spending and department budgets. Department budget overruns should not be acceptable. We support the continued phase out of the car tax. We ask you to pass a statute of limitations on tax collections of ten years. We propose a reduction in the usurious 18 percent interest rate charges on overdue accounts that go back to the Carter years. An 18 percent interest rate is just not right. It should be prime plus a certain percentage.”

The Estate Tax

“Tax and regulatory policy does impact migration patterns,” said ‘Cap’ Willey. “We are among the higher tax states. Our population is not growing, and much of that is attributable to our business climate issues.”

‘Cap’ Willey suggested that tax issues are causing Rhode Island to lose a Representative in Congress in 2022.

“We’ve got to make sure that we incentivize people who want to stay in our great State of Rhode Island and that our policies continue to move us in that direction,” said Speaker Mattiello. “So I’m talking a little bit about the estate tax. The estate tax exemption. Because folks like these, and ‘Cap’ Willey’s a big advocate for this – but I have not talked to an estate planner or an accountant, that has not told me that our productive citizens are leaving the State of Rhode Island.” [emphasis mine]

“How do we not address that?” asked the Speaker.

“We have an elderly population,” continued the Speaker. “We have a lot of folks that need the assistance of our safety net, and we’re not doing everything we can to keep our successful folks here.” [empahsis mine]

“Now unfortunately, that one becomes a little bit political,” continued the Speaker. “Ideology kind of rears its ugly head in that particular issue. And I’m not sure why but why wouldn’t we want our successful people to stay here to continue to pay taxes here, to continue to invest, continue to donate? So that’s going to be one that we at least have a conversation about and hopefully we can do something and move to make Rhode Island a little bit more competitive.” [emphasis mine]

State Rankings

“We’re being recognized as a state,” said Mattiello. “I was recently very proud to receive an award from the Tax Foundation. Nationally we’re being recognized as having an improved tax policy. That goes a long way. Rhode Island was never on the list of states that got looks from the business community. Now we are. Now we are. So we’re doing something right.”

The problem is that state rankings like those compiled by the Tax Foundations are just about meaningless.In 2016, in response to a Tax Foundation report, Economist Douglas Hall, director of Economic and Fiscal Policy at the Economic Progress Institute, wrote an oped explaining why these rankings are worse than meaningless and actually quite harmful.

Hall wrote, “The collective hand-wringing brought on by Rhode Island’s placing on the latest Tax Foundation’s ‘State Business Tax Climate’ is misguided at best, and at worst points to public policy choices that could undermine, rather than facilitate the Ocean State’s economic growth and recovery.”

State rankings are useless and dangerous. Grading the States, a website that tackles the issue of these rankings and exposes their serious flaws, is a great resource to learn more about this problem. Their one line analysis of the Tax Foundation’s business ranking?

“Combining more than 115 features of state tax law into a single index number produces a state ranking that turns out to bear very little relationship to what businesses actually pay in one state vs another.”

These facts didn’t stop ‘Cap’ Willey from spreading the gospel of state rankings. “We used to be 50 out of 50 [states],” said ‘Cap’ Willey. “The changes enacted and discussions with the ratings systems, the Tax Foundation, has helped Rhode Island improve…”

Legalizing Marijuana

“Before we start the recommendations… I have a presentation for both of you,” said ‘Cap’ Willey to Senate President Ruggerio and Speaker Mattiello. “Over the past couple of years we’ve noticed there’s been a little contention, some constructive interchange and disagreements among the two of you, so, I preface this by saying I mean no disrespect to any of our Native American friends, but, we thought this was appropriate for you. We thought it appropriate to have some peace pipes.”

There was laughter and applause as ‘Cap’ Willey presented his gifts.

“Some of your more progressive colleagues might want to more interesting stuff in there,” joked ‘Cap’ Willey. “As an aside, maybe that wouldn’t be bad, it would mellow everyone out.”

Speaker Mattiello thanked ‘Cap’ Willey for the gift.

“I want to thank these folks for that wonderful gift that I’m going to display in my office and if that legislation ever passes, who knows?” said the Speaker, to laughter. “I have not smoked marijuana but if it’s legal…”

House Rules

The battle over the House Rules was mentioned at the Summit only briefly. “Finally, I know we’ve had some discussions in the rules on allowing more bills to come forward,” said ‘Cap’ Willey. “I’m going to take a different position. I’m going to say we don’t need more bills. We need better bills… because the consequences of bad bills is a problem.”

See these links for coverage of last years Small Business Economic Summit:

See here for some of the effects the Small Business Economic Summit has on the General Assembly:

Here’s a list of the 26 legislators I either observed attending the Summit or were mentioned as being present at the Summit by the Senate President or the Speaker of the House:

  • President Dominick Ruggerio (Democrat, District 4, Providence)
  • Senator Roger Picard (Democrat, District 20, Woonsocket)
  • Senator Sandra Cano (Democrat, District 8, Pawtucket)
  • Senator Melissa Murray (Democrat, District 24, North Smithfield)
  • Senator James Seveney (Democrat, District 11, Bristol, Portsmouth)
  • Senator Leonidas Raptakis (Democrat, District 33, East Greenwich)
  • Senator Bridget Valverde (District 35, North Kingstown, Narragansett)
  • Senator Jessica de la Cruz (Republican, District 23, Burrillville, Glocester)
  • Senator Elaine Morgan (Republican, District 34, Exeter Hopkinton, Richmond, West Greenwich)
  • Senator Frank Ciccone (Democrat, District 7, North Providence)
  • Senator Thomas Paolino (Republican, District 17, Lincoln)
  • Senator Mark McKenney (Democrat, District 30, Warwick)
  • Senator Gordon Rogers (Republican, District 21, Coventry, Foster Scituate, West Greenwich)
  • Speaker Nicholas Mattiello (Democrat, District 15, Cranston)
  • Representative Robert Phillips (Democrat, District 51, Woonsocket)
  • Representative Terri-Denise Cortvriend (Democrat, District 72, Portsmouth)
  • Representative Liana Cassar (Democrat, District 66, Barrington, East Providence)
  • Representative Jean Philippe Barros (Democrat, District 59, Pawtucket)
  • Representative Susan Donovan (Democrat, District 69, Bristol)
  • Representative Bernard Hawkins (Democrat, District 53, Smithfield)
  • Representative Grace Diaz (Democrat, District 11, Providence)
  • Representative Deborah Ruggiero (Democrat, District 74, Jamestown)
  • Representative Justine Caldwell (Democrat, District 30, East Greenwich)
  • Representative Rebecca Kislak (Democrat, District 4, Providence)
  • Providence City President Sabina Matos (Ward 15)
  • Providence City Councilor David Salvatore (Ward 14)

Here’s all the video. I did not record the breakout sessions:

Susan Rittscher, President and CEO of the Center for Women and Enterprise
Grafton HCapWilley IV is a CPA and the managing director of the accounting firm CBIZ Tofias in Providence, RI
Neil Steinberg, President and CEO of the Rhode Island Foundation
Tim Hebert, Chief Managed Services Officer of Carousel Industries and Karl Wadensten, CEO, President and Lean Operational Leader of VIBCO Vibrators
John Gregory, President of the Northern Rhode Island Chamber of Commerce
Ronald Machtley, president of Bryant University
Grafton HCapWilley IV is a CPA and the managing director of the accounting firm CBIZ Tofias in Providence, Rhode Island
Senate President Dominick Ruggerio (Democrat, District 4, Providence)
Speaker Nicholas Mattiello (Democrat, District 15, Cranston)
Miriam Ross, Rhode Island Business Attorney
Ralph Coppola, Senior Advisor and Vice President of Corporate Benefits at Ivy Wealth Management
Gary Ezovski, Town Administrator North Smithfield, Rhode Island
Mark Deion, President of Deion Associates and Strategies Incorporated
Adriana Dawson and Oscar Mejias
Grafton HCapWilley IV is a CPA and the managing director of the accounting firm CBIZ Tofias in Providence, Rhode Island
John Gregory, President of the Northern Rhode Island Chamber of Commerce

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