Tax Incentive Evaluation Law: Rhode Island

Tax Incentive Evaluation Law: Rhode Island

This page is no longer being updated. As of June 15, 2017, newer tax incentive evaluation fact sheets are available here.

To ensure that economic development tax incentives are achieving their goals effectively, many states have approved laws requiring regular, rigorous, independent evaluations of these programs. For a list of states that have passed evaluation laws since the start of 2012, click here.

Rhode Island

S. 734, enacted July 11, 2013

What it does

Requires evaluation of all major tax incentives

Department of Revenue economists study existing tax incentives on a rotating three-year cycle, with new incentives reviewed within five years of creation.

The evaluations include both fiscal and economic results.

The reports note whether changes to data gathering or clarification of legislative intent could improve future evaluations.

Connects reviews to policymaking

The governor's budget proposal includes policy recommendations on each incentive that has been evaluated in the past year.

Legislators hold hearings on the recommendations, allowing lawmakers to consider tax incentives alongside other state spending priorities.

Excerpt from Rhode Island’s law: The governor makes policy recommendations

The governor's budget submission as required under chapter 35-3 shall identify each economic development tax incentive for which an evaluation was completed in accordance with this chapter in the period since the governor's previous budget submission. For each evaluated tax incentive, the governor's budget submission shall include a recommendation as to whether the tax incentive should be continued, modified, or terminated.

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This report advises states on how to design and implement tax incentive evaluation laws, so that these programs are studied regularly and rigorously and so that lawmakers can use the findings to improve economic development policy.