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BankRI, Lardaro on the Economy Series
January 2004

As 2003 comes to a close it is time to think ahead to the coming year. What would I like to see? Rhode Island must re-invent itself to break out of its historically bland performance. To accomplish this, I would like to see several political changes that would shake up the “status quo” and cause more meaningful (and frequent) economic debate.

1. Separation of Powers and Line Item Veto

Rhode Island’s existing form of government has economic consequences. Enemy #1 for us is the General Fund.  Once a major source of funds ends up there, the legislature can propose uses for that money and even staff boards that determine how the money will ultimately be spent. Objections by our Governor are sometimes  too easily swept aside. The line item veto would allow the Governor to question specific items he (or she) finds objectionable, greatly raising the level of economic debate here.

2. Term Limits for the Legislature Along With Four Year Terms
In fairness to our legislators, they should be allowed to have a longer elective time frame which could insulate them from the possibility of losing elections after making difficult but valid long-term decisions that have adverse short-term consequences. Limit legislators to a maximum of two four-year terms with restricted access to existing legislators should they become lobbyists after leaving office.

3. Conduct an Objective Examination of Both the Strengths and Weaknesses of Our Business Climate
To reinvent our state’s economy, it is imperative that we accurately and honestly determine how good (or bad) this state is as a place to do business. I suggest that this be done by two separate nationally recognized companies so that we can compare and contrast their findings.

4. Define Rhode Island’s Dominant Economic Niche in the Information Age
Since we became an Information-based economy in late 1987, we have never defined a dominant niche that builds on our strengths and minimizes our weaknesses. Time is running out for us to do this. If we conduct the critical examination outlined in #3 above, we can build on this as we plan for the future. Since we continue to have an over-concentration of resources in slow growth industries, we must move toward more rapid growth opportunities that will flourish in the future.

5. Given #3 and #4, Totally Overhaul Our Tax and Cost Structures To Be Consistent with Our Desired Niche.
This will take time and a great deal of effort, but it is essential. I have been saying this for years. The fact that our tax and cost structure is not conducive to rapid growth was recently affirmed by executives from both Raytheon and GTECH.

I believe that Rhode Island can have a very bright economic future.  But first, some of my wishes have to come true.  Happy new year!



by Leonard Lardaro

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