RIHA COLUMN: What’s at Risk in Rhode Island

By Dale Venturini, President/CEO, Rhode Island Hospitality Association (RIHA)

In Rhode Island, it’s not unusual to get a sneak peek at the Governor’s budget proposal. Whether it is a few days or a few hours before the official release in January, many of the major initiatives typically find their way to the public. This year was different though, because no one seemed to know what was going to be in the highly anticipated document.
With no warning, I was stunned to hear Governor Lincoln Chafee was proposing a 25% hike in the state meals and beverage tax. The increase, from 8% to 10%, accounted for $40 million in additional revenue for the state. My phones immediately started to ring off the hook. Association members, reporters, and many others all had the same question: What does this mean for hospitality and tourism in Rhode Island?
For the past three months, the RI Hospitality Association has been running a vigorous campaign to spread the word about what’s at risk if this proposal remains in the budget, becoming law. Conventions will become too expensive to host and tourists will choose more affordable destinations. Local families will not dine out as often and tipped employees will see their earnings decrease. Other workers will have their hours reduced or be laid off all together.
The impact extends far beyond just restaurants and hotels. Fewer visitors will decrease traffic at T.F. Green Airport. Other businesses that indirectly benefit from tourism will also see their sales decline. The list goes on. As the fourth largest industry in the state, and one of the only sectors to regularly add jobs, this has the potential to have a disastrous effect on Rhode Island’s economic health.
Now, after a three month campaign, we have reached what we hope is the final push. The month of May marks the annual Revenue Conference, where the State Budget Office updates lawmakers on the status of general tax revenue for the current fiscal year and makes an estimate for the next fiscal year.
If the estimates are favorable, then we hope lawmakers will remove the proposed meals tax increase from their version of the budget. If the estimates are unfavorable, then there is an almost certain probability the meals tax proposal increase will remain.
Many lawmakers have told constituents that there is nothing to worry about – that this tax increase will not pass because it is extremely unpopular. However, this tax increase isn’t like other bills. Other bills can be voted for or against, and that is usually the end of it.
The only way to eliminate an article from the budget – like the proposed meals tax increase – is to convince lawmakers to remove it altogether. If it remains in the final version of the budget, a lawmaker who does not agree with the measure would have to vote down the entire budget to ensure it does not become a reality.
Although they may not support the meals tax increase, odds are the budget contains at least a half dozen other measures the lawmaker does support. That means the budget will ultimately get their support, and Rhode Island will be saddled with one of the highest meals tax rates in the country.
Many people have already done their part to support our fight by educating their guests, signing petitions, and calling their lawmakers. Now, we need you to remind Rhode Island lawmakers one more time that 10% is too much.
Early this month, they’ll meet to discuss Rhode Island’s revenue prospects. Then, they’ll decide what proposed tax increases to keep, which to remove, and if they have their own ideas to close the budget deficit.
Pick up the phone, send an email, write a letter or sign a petition to declare 10% is too much, and remind Rhode Island lawmakers what’s at risk if this proposal becomes a reality.
For more information on the campaign against Rhode Island’s proposed meals tax increase, visit www.RIHospitality.org.