Rhode Island Faces Economic Downturn Amid Tax Proposals

News Summary

Rhode Island has reported its worst economic performance since the Great Recession, with only two out of twelve key indicators met, according to economist Leonard Lardaro. In addition, House Bill H-6256 seeks to impose new taxes on motorboats, stirring opposition from the boating and fishing communities. Meanwhile, significant job cuts have been announced by major employers, leading to a rise in unemployment rates, while the state’s sports tourism sector may provide some relief with projected spending of $18 million in early 2025.

Rhode Island has experienced its worst economic performance since the Great Recession of 2008, following the release of a report by URI economist Leonard Lardaro. The report, part of Lardaro’s monthly Current Conditions Index, revealed that Rhode Island only met two of the 12 key economic indicators necessary to reach the index’s threshold value of 16.

In addition to this economic downturn, House Bill H-6256, which proposes the removal of sales, property, and use tax exemptions on motorboats, is facing significant opposition from the boating and fishing communities. The bill, if passed, would introduce annual taxes on the 32,000 boats currently registered in Rhode Island, which may adversely impact working families — approximately 75% of whom earn less than $100,000 a year.

This proposed legislation has sparked concern among local business leaders, particularly Rick Bellavance, president of the Rhode Island Charter and Party Boat Association, who argues that the bill could introduce additional costs that hurt small businesses. Notably, the recreational fishing sector in Rhode Island contributes around $419 million to the state’s economy every year.

Testimonies against House Bill H-6256 emphasized the importance of protecting Rhode Island’s reputation as a boating- and fishing-friendly state. The marine trades sector in the state supports over 13,300 jobs and has gross sales totaling $2.65 billion, highlighting the sector’s significance to the local economy. As of now, this bill has been put on hold for further study.

Current Economic Challenges

The economic landscape in Rhode Island remains troubling, compounded by significant job cuts announced by several major employers, including CVS, Hasbro, and the Providence Journal. These layoffs collectively affect over 1,500 workers, and Blue Cross Blue Shield of Rhode Island has also announced layoffs impacting 30 employees.

Rhode Island’s unemployment rate has sharply increased from 3.2% in December 2023 to 4.6% in December 2024, marking a 43% rise. Furthermore, new claims for unemployment insurance have continued to climb since August 2024, indicating persistent layoffs in the job market. Additionally, the number of individuals exhausting unemployment benefits has increased annually, which signals ongoing challenges in the labor market.

Sports Tourism Outlook

Despite the unfavorable economic outlook, there may be a silver lining with the Rhode Island Sports Commission projecting that sports tourism could generate nearly $18 million in direct spending in the first quarter of 2025. This projection is based on the anticipation of hosting 15 sporting events, resulting in over 22,000 contracted hotel room nights and an estimated attendance of 78,550 visitors in local communities.

Notably, the upcoming 2025 NCAA Division I Men’s Basketball Championship is expected to contribute around $3.7 million in direct economic impact. Local businesses, such as Bristol’s Hotel Providence, have reported increased activity due to sports events, particularly volleyball tournaments.

Fishing Report

In the realm of recreational opportunities, anglers have reported favorable striped bass fishing conditions, catching fish sizes ranging from 28 inches to over 30 inches. In addition, tautog fishing has shown success from both shore and boat, with encouraging reports of cod in deeper waters, suggesting that while economic indicators may falter, Rhode Island’s natural resources continue to provide a source of local engagement and enjoyment.

Deeper Dive: News & Info About This Topic

• Providence Business News: Lardaro R.I.’s March Economy
• Providence Journal: Proposed Sales Tax on Boats
• Rhode Island Current: Providence Nightlife Economic Impact
• Turn to 10: Sports Tourism Impact
• World Atlas: Fastest Growing City in Rhode Island
• Wikipedia: Rhode Island