A leading Democratic lawmaker was not ready to commit Tuesday to a strategy for improving Rhode Island's economic woes after an all-day House summit examining the state's deeply troubled economy.
House Majority Leader Gordon Fox called the session a first step toward addressing an economic crisis that began in early 2007 when jobs in Rhode Island peaked. The unemployment rate stood at 12.9 percent in October, a worse jobless rate than any state except Michigan and Nevada.
Fox, D-Providence, said he had proposals for reviving the economy but was not ready to discuss them.
"For me to sit here today and say we're going to do X, Y and Z, I think, is premature," said Fox, who is campaigning to succeed House Speaker William Murphy in early 2011. "I don't think it's fair to the members and it would be foolish of me to do that."
State lawmakers promised to make the state's tanking economy their first priority at the start of their session almost a year ago. But aside from promoting green power projects and reconfiguring the state's Economic Development Corp., their list of economic accomplishments has been light.
The General Assembly is not scheduled to meet in full session until next month.
During the session, Robert Tannenwald, vice president of the Federal Reserve Bank of Boston, blamed a big burst in housing prices and a crisis in the financial sector for making the recession in Rhode Island deeper than elsewhere.
Home prices soared during the past few years because the state had little new construction, which reduced supply, he said. At the same time, easy lending standards enabled more people to qualify for mortgage, putting upward pressure on prices.
State leaders were also aggressively courting financial firms by offering them incentives to relocate to Rhode Island. For example, Fidelity Investments announced in 2006 that it was moving 1,500 jobs from Massachusetts to a campus in Smithfield.
As a result, Rhode Island fell hard when housing prices plummeted nationally, foreclosures soared and a crisis caused major job losses in the financial industry.
"You put your bet on the financial sector and you had a serious housing bubble. And the combination of the two set off a very serious contraction," Tannenwald said.
Lawmakers heard from economists and business leaders including Stephen Lane, CEO of Ximedica, a Providence-based company that helps firms develop new medical devices. He suggested that Rhode Island establish a $200 million seed fund to support new companies and entrepreneurs.
Besides soaring unemployment, lawmakers face a budget deficit of nearly $220 million, a shortfall equal to 7 percent of the income the state expected to receive. Fox said budget problems could constrain the state's response to the economic downturn.