In order for Rhode Island’s RhodeWorks plan to work, it has to not work

Truck_line.jpgThe reasoning for tolling trucks in Rhode Island nearly everywhere they commute is predicated on the idea that trucks cause more damage to the roads and therefore should pay more to use them.  Beyond the reality that truckers already pay more to use the roads via taxes and fees, the fact is that if politicians in Rhode Island genuinely intended to never toll passenger cars they would have passed Blake Filippi’s constitutional amendment to make such an effort very difficult.  Yet they did not, the RhodeWorks plan passed, and it is obvious as to why.

When RhodeWorks was introduced as legislation, many trucking companies stood up and said enough is enough.  One in particular was the Ocean State Job Lot.  Upon the announcement that the tolls were going to be a reality, the leadership of Job Lot announced it would postpone its plans to expand their business in Rhode Island with a 500,000 square-foot, $50 million distribution center.  This makes sense seeing such an expansion would incur major cost increases due to the eventual tolling of their trucks as they transit from the facility to other locations in RI and elsewhere in the Northeast.

In response to this, the Rhode Island Commerce Commission, Gina Raimondo, and much of the rest of the political class in RI passed a tax credit to Job Lot to the tune of $7.8 million over 10 years.  In contrast, According to Marc Pearlman the CEO of Job Lot, the tolls will cost his business nearly one million dollars a year.  This means the tax collection baked into RhodeWorks that was intended to fix Rhode Island’s roads and bridges will decrease by millions and the Ocean State Job Lot, for the most part, would not have to concern itself with a huge majority of the toll expense for ten years.

The success of Job Lot’s leadership is not an accident though; they know what they are doing.  They very likely recognize this concession is only postponing a major expense that will leave them noncompetitive in only 10 years.  According to the Providence Business News in quoting the Ocean State Job Lot’s spokesman David Sarlitto, “We have negotiated a deal that does not come anywhere near to filling that gap.”  In other words, even a concession of nearly $8 million is not enough incentive to build a $49.1 million facility in Rhode Island while RhodeWorks is law.

Notes_planning_sm.jpgIf the Ocean State Job Lot’s leadership came to this conclusion, what will all other businesses that rely heavily or even moderately on trucking in Rhode Island conclude as well?  If this incentive doesn’t even come “anywhere near” what is needed to invest in RI, the only option the politicians have­ is to give an even greater tax break to Job Lot or be responsible for those lost jobs and revenue. 

Furthermore, unless the political leadership of Rhode Island wants other companies that rely on trucking to leave or avoid any growth in Rhode Island, they must continue this precedent with concessions to every other business that relies on trucking.  Or, in the more likely and intended scenario, endow Rhode Island politicians with more power to continue to choose which businesses are politically connected enough to receive a tax break while forcing the other, smaller businesses to fail or struggle to survive burdened with this huge disadvantage.

Therefore, it is obvious there are only two consequences that are inevitable from the passage of RhodeWorks:

1.  Either businesses leave Rhode Island and avoid the tax

2.  Politicians buy off businesses by offsetting the toll tax with tax breaks

Rhode Island’s budget is, without question, bloated and out of control.  There is no surplus from which any tax breaks can be offset and it is obvious there is no political will to cut spending.  Therefore, for every tax break given the tax burden must be shifted elsewhere.

The end result is, of course, that the gantries will be built, the money will be spent, the debt will be incurred, and the planned mechanism to pay for it will not materialize. 

In other words, in order for the RhodeWorks toll plan to work, it has to not work. 

With businesses either leaving or being paid to stay, the obvious reality is that this burden will be shifted to the residents of Rhode Island by way of higher prices and having to pay a toll to commute nearly everywhere in the state.

This is why the Gaspee Business Network is Rhode Island’s only hope for a prosperous future.  There is a means for anyone, even non-business owners, to contribute to our efforts.  We need your help, join us today.

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