Welcome to Governor Lincoln Chafee’s world as he copes with fallout from his predecessor, Donald Carcieri. RIPR political analyst Scott MacKay explains.
Governor Chafee was sitting at a spare conference table in his State House office staring grimly at budget figures when a visitor ambled in and blurted, “So governor, it looks like you are having another `thanks Don’ afternoon.’
Chafee’s face creased into a rueful `that’s-not-even-funny’ grimace. Thanks Don refers, of course, to former Gov. Donald Carcieri, the conservative Republican who held the office for eight years before Chafee took over 17 months ago.
Chafee has spent way too much time sweeping up the mess he inherited from Carcieri, the once ubiquitous Rhode Island politician who is now retired in his Saunderstown manse by the sea, hiding from the media and the taxpayers he so avidly fleeced.
Until last week, Chafee thought he was making some progress cleaning up the various dysfunctional state government departments he assumed from Carcieri. The endless lines that clotted the DMV have been largely fixed. And the unemployed no longer linger on hold at the DLT telephone exchange.
Then the governor was hit with the runaway freight train that is the Curt Schilling 38 Studios default, the worst hangover from the Carcieri tenure. A quick history lesson here: as he was headed out the door Carcieri saddled the taxpayers with a $75 million crony capitalism deal to lure the washed up Red Sox pitcher’s video game company to move from Massachusetts to Providence.
At the time, Chafee was campaigning for governor as an independent. Chafee vigorously opposed the deal, as did Ken Block of the Moderate Party. What Carcieri and his enablers in the General Assembly did was bet $75 million in state loan guarantees on a celebrity jock with no business experience, unless you think throwing a fastball qualifies one for an MBA.
The ironies here are delicious. When Carcieri ran for governor in 2002, he posed as an outsider business executive who would bring good jobs to a state in dire need of them. Carcieri branded his opponent, Democrat Myrth York, as a big spending liberal who favored expanding welfare for the undeserving poor. Carcieri won and expanded welfare to the rich, using his office to help Schilling. And don’t forget the sweet no-bid 20-year state lottery contract Carcieri cut for gambling giant GTECH.
And how about the ocean of hypocrisy on the parts of Schilling and Carcieri, both self-styled conservative Republicans who purport to believe in free markets and small government. Except, of course, when a failing governor desperate for an economic legacy bribes a wealthy ballplayer to R.I. with OUR money.
There is only one reason Schilling decided to move his company from Massachusetts. Massachusetts economic development gurus were willing to help Schilling’s company with such traditional economic development tools as tax breaks, but they refused to put the taxpayers on the hook for millions by investing in a very risky business.
So Carcieri bet Rhode Island taxpayers money instead of letting the free market of venture capitalists finance 38 Studios. In return, Rhode Island poached several hundred jobs from the Bay State when Schilling moved the company to Providence.
The saddest part of all this is what could have been done to help home-grown Rhode Island businesses with state-backed loans. Seventy-five million could have been distributed to 75 different small businesses that were having a hard time getting to access to traditional financing in the aftermath of the Wall Street Crash.
Before the 38 Studios fiasco, Chafee was trying to deal with the financial crisis that has pushed such distressed Rhode Island communities as Providence, West Warwick, Woonsocket and Pawtucket to the precipice of bankruptcy. Chafee has been fighting this lonely battle himself, without any cooperation from either Assembly Democratic leaders or State Treasurer Gina Raimondo. (Chafee cracked last week that Raimondo is “more I than RI.’’
Chafee has trekked from Westerly to Woonsocket seeking support from local town and city councils for a package of legislation to help cash-strapped communities. So far 33 have signed on.
One of the big reasons the cities and towns are hurting were the devastating cuts in state aid pushed by Carcieri and approved by his legislative enablers in the budgets from 2009 to 2011. State aid to Providence was slashed by $55 million. Aid to Pawtucket dropped by $20 million, Woonsocket lost $13 million in state aid and West Warwick was cut by $6 million.
At the same time Carcieri was starving the communities of state aid, he cut taxes for the wealthy and allowed communities to raise the odious clunker tax on vehicles worth less than $6,000.
Chafee and Carcieri are much different characters. Chafee is less impressed with the trappings of office than any recent governor, except Republican Lincoln Almond. Can you see Chafee pulling a Carcieri and booting his communications director from a plush State House office so he could turn it over to his wife?
Rhode Island politicians never seem to learn from the mistakes of the past. Our state government has been down this business subsidy road before. In the early 1990s, then-Gov. Bruce Sundlun gave Alpha Beta, a Massachusetts bio tech company, $33 million in loan guarantees to move to Rhode Island. Alpha-Beta moved here because then-Massachusetts Gov. Bill Weld refused to match the Rhode Island deal. Rhode Island even built Alpha Beta a factory. Then the company went belly-up after Sundlun left office.
The mess landed in Almond’s lap. (Has anyone noticed how much better Almond’s tenure looks these days?) Almond’s economic development director, John Swenn, was able to find a company to move into the factory. In the end, Rhode Island taxpayers took a $4.5 million loss, which didn’t make Almond happy but did avert a much deeper river of red ink.
A 38 Studios failure would be much worse. What can the state salvage from Schilling’s company, which is housed in leased offices in downtown Providence? What do you think used laptops are worth? How about vaporware? And do you know any lawyers who specialize on foreclosing cyber space?
So Rhode Island is once again a national laughingstock. Thanks Don.