RI back to dead last in CNBC’s annual state rankings

Business News

PROVIDENCE, R.I. (WPRI) — It was fun while it lasted.

After two years out of the bottom spot, Rhode Island on Wednesday returned to 50th out of 50 in CNBC’s annual ranking of America’s Top States for Business. The state previously ranked last in 2016, 2014 and 2012, but in 2017 and 2018 had moved up to 45th, its best showing since the list began in 2007.

Noting that Gov. Gina Raimondo frequently argues Rhode Island is in the midst of an economic “comeback,” CNBC’s Scott Cohn wrote in an accompanying article: “So far, however, no comeback is showing up in the numbers.”

“The state’s issues have been remarkably consistent throughout,” Cohn wrote. “State finances have been in poor shape, sapping Rhode Island’s ability to tend to basic things like maintaining its aging infrastructure. The tax and regulatory climates have been rough, and economic growth has been sluggish. But at least the rankings have managed to edge a little higher in the last couple years.”

Rhode Island continues to rank last for infrastructure, with 23% of its bridges structurally deficient. (Raimondo’s 10-year RhodeWorks program is supposed to get that below 10% by 2025.) Its economy is among the most sluggish in the nation, with only 0.6% growth last year, and its state employee pension plan is little more than half funded. (The general treasurer has said that should improve in the next five to seven years.)

“Other issues involve costs,” Cohn wrote. “Rhode Island had the nation’s seventh highest cost of doing business last year, according to our study, including the third highest natural gas prices. The cost of living was the nation’s 10th highest.”

Massachusetts once again ranked far higher than Rhode Island on the list: 14th, though that was down from 8th in 2018 and 10th in 2017. Connecticut ranked 35th, up from 37th in 2018 but still below its 33rd ranking in 2017.

The top-ranked states were Virginia, Texas, North Carolina, Utah and Washington. Joining Rhode Island at the bottom were Hawaii, Mississippi, Alaska and Louisiana. Maine and Vermont were also in the bottom 10, while New Hampshire was 25th.

The CNBC list and its methodology have critics, but Rhode Island’s elected leaders have made clear over the years they care about the state’s perennially poor showings on this and other national business-climate rankings.

The announcement comes at an inauspicious moment for Raimondo, who left Tuesday night for the elite Allen & Co. Sun Valley Conference in Idaho in an effort to drum up economic-development opportunities for Rhode Island. And it comes the same day The Wall Street Journal published its second article this week on a devastating review of the Providence schools.

Matt Sheaff, a spokesperson for the R.I. Commerce Corp., said the CNBC list “paints an inaccurate picture of Rhode Island’s economy,” though he acknowledged state leaders “still have more work to do” in areas such as infrastructure and education.

“It’s clear the CNBC ranking failed to account for significant investments we have made in recent years in infrastructure, workforce development and business growth — investments that have helped produce the largest drop in unemployment in the nation, the first positive labor force growth in over a decade, wage growth that is outpacing the nation, and a record-high number of jobs,” Sheaff said.

The new ranking is a blow to the General Assembly’s Democratic leaders, as well.

House Speaker Nicholas Mattiello, who has been in his job even longer than Raimondo, has touted a laser focus on “jobs and the economy” since he began leading the chamber in 2014. And now-Senate President Dominick Ruggerio helped lead a 2012 Senate initiative called “Moving the Needle” explicitly aimed at improving Rhode Island’s national rankings.

Ruggerio spokesperson Greg Pare said the Senate has “taken many steps to address factors considered in surveys like the CNBC rankings,” such as reducing taxes for businesses and eliminating “thousands of pages of burdensome regulations.” But he acknowledged “considerable work remains,” particularly on infrastructure, which he said is why an “aggressive plan” for repairs is in place.

“Additionally, the Senate president understands the hurdles many businesses face when trying to locate or expand in our state,” Pare said. “He has worked to change policies and help companies invest here.” He cited new laws just enacted to streamline building inspections as well as Ruggerio’s efforts to assist New York developer Jason Fane with his proposal to build a new apartment tower in Providence.

In a statement to Eyewitness News Wednesday afternoon, Mattiello called the rating drop “disappointing but not surprising” and said the Raimondo administration needs to do a better job supporting local businesses.

“The Administration must look at the economy more comprehensively and not just pay for individual companies to locate here,” he said. “The Commerce Corporation has to focus more on helping home-grown businesses improve their economic conditions.”

“I hope this report serves as a stark reminder of the work ahead and government officials begin to act with more urgency,” Mattiello added.

Progressives and union leaders also questioned the underlying assumptions of the CNBC rankings. Matt Taibi, secretary-treasurer of Teamsters Local 251, argued the list was “flawed.”

“Businesses will inherently prefer a state or region with a lack of labor and environmental regulation, with low wages and little push back on ‘pro-business’ legislative initiatives,” Taibi wrote on Facebook. “This preference doesn’t make it good for working families.”

Ted Nesi (tnesi@wpri.com) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook

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