Earlier this month, Rhode Island adopted a law requiring that economic development tax incentives undergo regular and rigorous evaluations. The legislation (S 734) passed the General Assembly with only one dissenting vote and was signed by Governor Lincoln Chafee.
Because of this legislation, Rhode Island is on track to become a leader among the states on the evaluation of economic development tax incentives—those tax credits, deductions, and exemptions meant to increase jobs and businesses. Rhode Island is now one of only a handful of states to establish an ongoing schedule for such evaluations and ensure that evidence from these reviews informs lawmakers’ decisions on whether and how to use tax incentives.
Among the notable features of Rhode Island’s law are:
The Pew Charitable Trusts advised sponsors of the Rhode Island legislation, helping them apply and build on lessons identified in “Evidence Counts,” Pew’s national study of incentive evaluation practices. The report, released in April 2012, found that Rhode Island was among the 25 states “trailing behind” because it had not taken basic steps needed to know whether its incentive programs are effective.
Pew’s experts are working with state lawmakers, agency staff and economic development officials to advance policies that make tax incentive programs effective, accountable and fiscally sound. Learn more.