NEGATIVE HEADLINES about Rhode Island are as numerous these days as sailboats on Narragansett Bay in the summer. We are being bombarded with news about large budget deficits, political corruption, bad business climate, balkanized governmental structure and tepid job growth. Commentators project doomsday scenarios for Rhode Island.

I don’t believe that we are in such a state. Before we all move to such supposedly more inviting places as Wyoming, South Dakota and Nevada (the three states with the most highly rated business climates), a more evenhanded and comprehensive assessment of our situation is desperately needed.

I run an organization, Grow Smart Rhode Island, that has advocated alternatives to the state’s economically and environmentally inefficient sprawl-development patterns of the past 60 years. We have proposed reforms to stimulate urban redevelopment and discourage development of our remaining farms and forests. We fight for this agenda because we believe that Rhode Island has vast untapped potential that can be realized by playing aggressively to our many strengths.

Numerous underreported facts and trends support this hopeful, if unconventional, outlook. As we enter an era of rising energy costs marked by increased concern about public health and quality of life, Rhode Island’s pedestrian-friendly village-settlement pattern, historic charm, relative energy efficiency and strong environmental-protection ethic are among the attributes that should give us a competitive advantage over the vast majority of bigger, brawnier states.

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However, we first need to step back from our psychological abyss, regain some perspective and get over “uniqueitis,” the perception that our government and economy are uniquely flawed and incompetent. While it may be news to some, we’re not, for example, the only state with a structural state budget deficit. From sea to shining sea, states face similar predicaments, including California, Maryland, Michigan and Wisconsin. We’re also not the only state with a serious outbreak of political corruption. Just scan recent headlines from Alaska, Illinois, Ohio, New Jersey and Pennsylvania. And we are not the only state with a fragmented governmental structure. Look at Massachusetts’s 351 cities and towns (more municipalities per capita than Rhode Island) and Pennsylvania’s 2,500 units of local government.

Two areas where our rankings do compare unfavorably with most other states (particularly those outside the Northeast) are tax burden and business climate. While disturbing, these rankings should be viewed in the context of our top 10 rankings on indices for health care, fitness, environmental commitment and energy efficiency. Moreover, upon close inspection, the business-climate rankings don’t hold up as a broad gauge of a state’s well being. Consider for example, that 9 of the 10 top-rated states on the Tax Foundation’s 2007 “State Business Tax Climate Index” have health-care systems ranked lower than Rhode Island (per a 2007 report of the Commonwealth Foundation) and that half of these business-climate stars have a higher poverty rate than we have (per the U.S. Census Bureau).

So, as we face our immediate budget and economic problems, we need to look at them with some perspective and to turn away from self-flagellation, defensiveness and low expectations. In shaping a better Rhode Island we must not only address our weaknesses but recognize our strengths, and pursue policies that capitalize on them. Without such a balanced approach, we will consign ourselves to a mediocre future and underachiever status.

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What are our key strengths?

First, and perhaps most undervalued, is our relatively compact village-development pattern. This gives us a competitive advantage over many more sprawling and auto-dependent states in energy efficiency and the promotion of healthy living.

Second, there are promising investments in two critical sectors of our economy, health care and tourism. The recently announced $100 million gift for the Brown University Medical School is likely to generate major health and economic-development spinoffs, including creating the critical mass of technology and talent to stimulate many more local bio-medical businesses and jobs.

In tourism, 500 new hotel units have recently come on line in downtown Providence and an additional 600 units are projected by 2010. These developments will let Providence host substantially larger conventions than previously possible.

Third, we have a large, vibrant higher-education sector that we must tap more effectively for economic development. Such institutions as Brown University, Johnson & Wales University, Bryant University, the Rhode Island School of Design, Salve Regina University, Providence College, the University of Rhode Island and others are expanding their facilities and faculties, and in so doing generating new jobs while preserving our enviable distinction of having more college students per capita than most other states.

Fourth, our marine industries and financial-service companies are thriving thanks to targeted state incentives and the local availability of workers for these sectors’ needs.

Fifth, due largely to the stimulus provided by Rhode Island’s nationally renowned State Historic Preservation Tax Credit, a multibillion-dollar reinvestment continues in our historic urban, town and village centers — a reinvestment that is reversing the long-term decline in our localities’ tax bases and reinforcing the state’s marketability as a place of remarkable architectural and natural beauty.

Sixth, we are making major infrastructure investments that should pay long-term dividends. These include investments in public transportation — through a 20-mile commuter rail line from North Kingstown to Providence set to begin operations in 2010;affordable housing — through funds from the $50 million affordable-housing bond, and in water-pollution abatement — through the completion next October of our major Combined Sewer Outflow project’s first phase. Save the Bay reports that this will reduce the flow of sewage into Narragansett Bay by about 40 percent.

Seventh, we sustain a tolerant, creative atmosphere grounded in the ethos of Roger Williams and bolstered by our strong arts and culinary communities. According to such economists as Richard Florida, this is the kind of atmosphere America’s expanding and increasingly mobile creative class is looking for in choosing where to live, work and invest

Eighth, we have a wide array of quality-of-life assets including:

• A remarkable urban/rural balance as the 2nd-most urbanized and 15th-most forested state, and the one with the 2nd-highest rate of local farm products being locally consumed.

• Accessible and numerous environmental treasures and a commitment to protect them as reflected in our recent rating by Forbes Magazine as the 8th “greenest” state.

• A sharp decline in the crime rate of Providence at the same time as many cities of similar size outside Rhode Island have had increases.

• An ample water supply, even though it is a resource that clearly needs to be better managed and distributed to address the state’s key environmental and economic objectives.

• Moderate weather that spares us most of the devastating weather-related events attributable to tornados, hurricanes and droughts.

So what are we to make of the sharp contrast between these formidable assets and the drumbeat of negative media stories? That there is cause for optimism and a responsibility to be bold. For example, we need to be pursuing, as Governor Carcieri has proposed, national leadership in wind energy. And we should, as Providence Mayor Cicilline has proposed, be developing an effective public-private partnership to expand our public-transit system to accommodate new urban growth efficiently and take full advantage of our compact development patterns.

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To maximize further the advantage of our compactness, more of our local communities should make it easier for well-planned growth to occur in their built-up areas through smaller lot-size requirements and village zoning ordinances that let homes, schools, business and offices be within walking distance of one another. To encourage these reforms the state should expand its investments in infrastructure, community development and housing to urban and town centers.

As we seek to reinvent government and improve opportunities for all Rhode Islanders we must be more operationally efficient since we lack the economies of scale in government programs enjoyed by bigger states. This argues strongly for eliminating duplication of services by encouraging regional approaches in education, purchasing, transportation, economic development and property taxation.

But as we pursue various reforms, let’s not delude ourselves that with our compassionate values, limited scale and four-season weather we will ever have taxes as low as in Florida or Texas or the range of large industrial spaces and the array of big companies they attract found in such mega-states as Virginia, Tennessee and Indiana. Let’s not waste time trying to be what we never can be.

Our budget crunch will require us to make some very difficult decisions about state personnel policies, possible broadening of our narrow sales tax and streamlining services to increase efficiency rather than human pain. As we consider these tough decisions, we must avoid shortsighted actions that will deepen our structural budget deficit by undermining key incentives for economic and neighborhood revitalization, such as the State Historic Preservation Tax Credit and Tax Increment Financing.

The most critical factor both for our short- and long-term well being is to stop beating ourselves up and letting our key assets go largely unrecognized and untended. All those who have had their lives enriched by Rhode Island’s beauty, variety, friendliness, historic charm, tolerance and accessibility should commit themselves to put our outstanding attributes to work for us and future generations.

Scott Wolf is executive director of Grow Smart Rhode Island.