Fiscal Year (FY) 2013 Budget update
The Chamber of Commerce Coalition has long been active in ensuring that the voice of business is heard at the Rhode Island State House. Our team of 11 Chambers of Commerce and a collective 7,300 member businesses gives the Chamber Coalition the strength to proactively support legislation that is beneficial to Chamber members and help defeat legislation that is harmful to members. For the remainder of this legislative year our voice will need to be heard as loud as ever.
As Chamber Coalition members are well aware, our state has suffered through an extremely difficult set of economic circumstances in the past several years. We were one of the first states to experience the great national recession and we are one of the last states to show some signs of recovery. At its peak during the recession Rhode Island’s unemployment rate jumped to an all time high of 12.8% while the state shed some 47,500 jobs as well. Due in large measure to these terrible economic conditions we have faced, our state budget shortfalls in the current and last three budget years have exceeded $1.5 billion. The RI Constitution requires a balanced budget each year so the Governor and General Assembly need to make up any shortfall before the beginning of each fiscal year on July 1st. There are only two ways to balance a shortfall; the state can decrease its spending or it can increase taxes. Sometimes the easier of the two options is to raise taxes. That is especially true if the increased/new/expanded taxes are primarily from the business community vs. taxes that would be borne by all Rhode Islanders. Although it might be the easier option, increasing taxes or creating new taxes while an economy is beginning to recover could serve to send the state in a downward economic spiral .Thankfully, with great support from Chamber Coalition members and leaders of the RI General Assembly, we have seen responsible budget and taxation policy and very limited new or increased taxes in the past few years.
In the coming budget year (FY 2013) the state once again faces a budget shortfall; $161 million. To solve the shortfall Governor Chafee requested approximately $88 million in new, increased or expanded taxes along with $73 million in spending cuts. For Chamber Coalition members the proposed taxes could hit particularly hard. That is because almost half of the new tax revenue will come from a 2% increase in the meals/beverage tax (to a total of 10%.) Rhode Island has an active hospitality industry and will no doubt suffer if such taxes are enacted. (Fewer people will go out to eat, fewer conventions and weddings will come to the area, etc.) The governor’s proposed budget also contains an expansion of the state sales tax to currently
exempt services such as shipping, warehousing and transportation. (This would create double taxation in some areas.) There are also proposals to tax shuttle and bus services, (also hitting Northern RI hard) taxi rides, car washes and more. The Chamber Coalition has been on record for many years as opposing proposals to increase taxes or create new taxes. We believe that responsibly controlling state and local spending is a better solution. Given that, Chamber members need to continue to get our message of opposition to the proposed taxes out to members of the General Assembly and the Governor. The Chamber of Commerce Coalition will soon activate our electronic advocacy tool allowing Chamber members from throughout the state to contact their two state legislators and register opposition to the proposed new, increased and expanded taxes. The web based tool can be found at: http://rhodeislandbusinessvotes.com. There you can also find important legislative updates as well as a list of all the proposed taxes found in the budget. The Chamber Coalition is also working hard to repeal the so-called “sightseeing and tour tax.” (Enacted in the budget of Fiscal Year 2012 and effective October 1st of last year.) We urge everyone who is concerned about these proposals to log on to the Chamber Coalition website and contact your legislators. Raising taxes and creating new taxes is not the way to balance our state’s budget. There are other more responsible ways to do so. Stay tuned in the coming weeks and months for more updates.
For questions, comments, concerns or to get involved, please contact David Carlin, Vice President of Government Affairs for the Northern RI Chamber of Commerce and coordinator/lobbyist for the RI Chamber of Commerce Coalition, at (401) 334-1000 ext. 107 or by email at firstname.lastname@example.org