In these trying times, with about one-hundred thousand Rhode Islanders recently laid-off and unemployment rates that could soon reach 30%, common-sense public state-based policy can help mitigate the destructive economic impact of the Rhode Island Covid-19 crisis … and can help restore a sense of normalcy and financial security.
In response to this health crisis that is impacting our lives in so many ways, our state government’s actions to shut down commerce across many industries is inevitably having a crushing impact on small businesses, jobs, and family budgets… creating anxiety and fears among our populace.
On top of the major disruptions to our daily lives, our individual and societal peace of mind has deteriorated, with many Rhode Islanders concerned not just about their health, but also worried about their financial well-being.
However, leading national voices from across the political spectrum – The New York Times, the Wall Street Journal, the Governor of New York, and the President of the United States – have raised awareness about the need to restore economic activity as part of our nation’s recovery from the coronavirus crisis.
As the federal government considers various assistance programs, it is vital that Rhode Island’s political leaders also play a positive role in restoring prosperity. It is a historical fact that economic depressions kill people, too… we must not let our Ocean State’s circumstances come to that.
Governor Raimondo has asked the business community for more time and patience as our state’s health care system is strengthened, before the “temporary,” yet major, restrictions on the private sector are lifted.
The public policy solutions recommended in this paper include a number of smaller, “temporary” solutions that can be implemented – beginning now, while the larger state mandates remain in place – and that should remain in place until our state’s economy is fully recovered.
While the governor asks for the public’s trust, state leaders, likewise, must place trust in the power of the American people – business innovation and individual consumerism, guided by the free-market system – to be the driving force in lifting Rhode Island out of this severe economic crisis.
Specifically, the General Assembly must find a way to convene and govern – and to consider emergency rescue legislation that balances the need to address the state’s budget with the need to bolster the budgets of families and businesses.
Rhode Island COVID-19 Recovery by #GovernmentDistancing. To aid in Rhode Island’s economic survival and eventual recovery – and to restore confidence about our future among the populace – the Center suggests that there are many ways our state government can take important and symbolic actions in alleviating some of these concerns about our individual and overall financial security.
The common-sense ‘crisis recovery’ policy ideas recommended in this paper are designed to free-up individuals and employers in the private sector to be able to speed back to the peak employment and income-levels that we saw before the COVID-19 crisis. These solutions are especially beneficial to a state economy that is suffering catastrophic job losses as we have seen in Rhode Island.
Many states across America are aggressively taking or considering similar steps, and Rhode Island must not lag behind. By temporarily suspending certain taxes and regulations that hold back economic growth, by practicing what we call “government distancing,” political leaders can separate unnecessary government burdens from those suffering the most distress … and help clear the way for rapid economic recovery.
In late March, our Center published 10 initial pro-active policy recommendations. 10 NEW POLICY SOLUTIONS ARE INTRODUCED IN BOLD CAPS BELOW.
Already in Rhode Island, one of the Center’s early common-sense recommendations has been enacted:
- To allow alcoholic beverages to leave restaurants when sold with a food take-out order. This will help many restaurants to maintain cash flow and better serve their customers.
Other common-sense reforms include:
- REPEAL BANS ON SINGLE-USE PLASTIC BAGS and other items s the COVID-19 virus, and other bacteria, can live on re-usable plastic bags for many days, Rhode Island should repeal all state and municipal bans on single-use plastic bags, straws, and other items. (Maine, New York, and Hew Hampshire have taken action to roll back similar laws)
- TEMPORARILY LIMIT LEGAL LIABILITY FOR VOLUNTEERS AND CHARITABLE ORGANIZATIONS that may wish to provide a helping hand during this crisis
For small businesses and their employees, it will be important to get as many people back to work at their normal shifts as soon as possible. However, the ramp-up to normal business conditions, and the associated revenues, may not be as fast the shut-down was. Therefore, as a short-term measure, the Center suggests:
- Temporarily reducing Rhode Island’s minimum wage to the federal level of $7.25 per hour. Our state’s hourly wage mandate of $10.50 is scheduled to rise to $11.50 on October 1st. By providing employers with more flexibility in hiring back their workforce, more Rhode Islanders can more quickly be put on the road to economic recovery. Consideration should be given to limiting this wage-suspension to apply only to newly created or revived positions.
- Additionally, with government assuming further responsibility for aiding low-income families as we recover from this crises, the state should temporarily increase the Earned Income Tax Credit (EITC).
- Temporarily extending the deadlines for businesses to remit collected sales taxes to the state. This option would give many businesses additional near-term cash flow when it comes to compensating their employees, paying their rent, or covering other vital overhead expenses.
- Temporary suspension of the corporate minimum tax, which imposes one more burden on individual looking to start a new business, or maintain their existing small business – for instance, as sole proprietors or limited partnerships – even if the businesses loses money.
- Repeal the ban on flavored vaping products to restore choice to Rhode Island adults and to help this industry hire back the workers it was forced to lay-off in 2019.
- EXTENDED DEADLINES FOR COMMERCE-RELATED LICENSING by the Department of Commerce and Insurance would help ensure existing small businesses remain legally operational
Regarding the 2021 budget process, and given the unpredictability of how quickly our state economy and government tax receipts will recover, it is vital that government live within its means, without placing additional burdens on an already distressed private sector. As New York Governor, Andrew Cuomo, recently stated … his state government is not going to be able to deliver all of the services and programs it did before the crisis, and can only begin to do as actual government “receipts” dictate.
- FREEZE ALL TAXES, STATE & MUNICIPAL, AT CURRENT LEVELS to ensure that families and businesses, that have faced major income cut-backs of their own, are not forced to shoulder the burden of non-essential government spending.
Labor Reforms. To decrease pressure on municipal and state budgets and to lessen the urge to increase taxes on Covid-19 devastated families and businesses:
- TEMPORARILY SUSPEND PREVAILING WAGE LAWS that artificially drive up the cost of contracted services by state and local governments by requiring open-shop vendors to pay labor rates significantly higher than they normally would
In March of 2029, the Center published a policy brief with a policy idea that would provide a financial incentive for Ocean Staters to work, shop, and eat at home as much as possible, as the government has either mandated or recommended. To encourage online commerce as a form of social-distancing, the Center recommended:
- Temporarily suspending Internet Sales Taxes. Consideration should be given as to whether this suspension should only apply to in-state purchases and deliveries.
Regulatory Reform & Occupational Licensing. For entrepreneurs or individuals looking to start a new career, or to engage in the “gig” economy, and to encourage them to re-enter the workforce as quickly as possible, it is vital that our Ocean State be a welcoming state in support of their desire to engage in meaningful work:
- INSTITUTE TEMPORARY “RECIPROCAL” OCCUPATIONAL LICENSING, so that licensed professionals in another state, who may be moving to our state to help with the crisis or to establish a new career, can immediately and legally work in their licensed field of expertise.
- Eliminate sales and hotel taxes on people who offer short-term rentals, independently or through online services like AirBnB. This will encourage home-owners to develop new revenue streams for their households and will make our Ocean State a less expensive tourism destination for many during the vitally important upcoming summer season.
On the health insurance front, many people who have lost their jobs may also have lost their private health care coverage. Currently, Rhode Island’s onerous insurance regulations makes it impossible for provider to offer “short term” insurance plans, either forcing newly uninsured people into much more expensive government-improved plans, onto Medicaid, or to risk living without insurance (and subsequently being penalizing with a fee.)
To help individuals who may be in employment transition during this crisis, Rhode Island should:
- EXPANDED SCOPE-OF-PRACTICE ALLOWANCES for nurses, pharmacists, medical technicians, medical students, and childcare providers … such they can perform necessary medical testing or care in their field of expertise or for which they may have received training [FL]
- Remove insurance laws that discourage the sale of short-term health insurance plans, so that patients can be offered lower-cost insurance options from a broader array of providers.
Other health related policy ideas include:
- Waive regulation to allow medical professionals licensed in other states to be licensed to practice or conduct tele-health services in Rhode Island as was done in Missouri.
- Repeal Certificate of Need laws that restrict healthcare providers from acquiring advanced technologies, such as medical imaging devices. Such protectionist-driven laws must not become a barrier to Rhode Islanders receiving the the quality care they deserve.