Ken Block is a Barrington version of Don Carcieri


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block carcieri
Ken Block, at last night’s WPRI/Providence Journal debate. Top right, Don Carcieri.

“Only an outsider can fix what’s broken here,” said Barrington businessman Ken Block during last night’s first Republican debate for governor.

His opponent, Cranston Mayor Allan Fung, may want to paint Block as a opportunistic flip-flopper, but to me he sounded a lot like the last affluent private sector executive from the suburbs to preach the “outsider” gospel.

And we all know how that turned out.

Don Carcieri was a private sector superstar before turning to politics. He was elected governor twice, in 2002 and 2006, but he’s now widely regarded as the worst chief executive of the state in recent memory. He wasted huge amounts of time opposing economic growth, like a deep water port at Quonset and a casino, both of which came to fruition, albeit late, after he was gone. His economic coupe de grace, of course, was his very publicly courtship of Curt Schilling and 38 Studios. He also ordered state troopers to raid a Narragansett Indian tobacco store when the tribe claimed a tax exemption. Whatever folly one associates with Carcieri, it’s fair to say he’s a third rail for Republicans, a whipping post for Democrats and an embarrassment for everyone else.

And before being elected to office, his political resume looked a lot like Ken Block’s.

Carcieri is from East Greenwich while Block is from Barrington. Carcieri ran a business called Cookson while Block runs one called Sympatico. Both built effective bully pulpits through favorable treatment from right-wing media like WPRO and the Providence Journal editorial page.

They have similar policy prescriptions, too. Both believe very strongly that welfare inefficiencies substantially hinder economic progress. And both suggest shrinking government is a growth strategy. Both believe private sector experience translates into public sector effectiveness, even though the Ocean State has seen scant evidence of such ever since Democrat Bruce Sundlun left office.

The problem for Block is that Carcieri, Rhode Island’s most recent GOP governor, has more-recently exemplified how terribly wrong the CEO-governor model can go. Carcieri’s Big Audit mentality may have succeeded in shrinking the size of government, but that has harmed the overall economy and exacerbated unemployment. What then will be the unintended consequences of Ken Block’s goal of eliminating $1 billion in government programs. A business person can eliminate expenses, but a governor can only redistribute them.

Governments, wrote House GOP leader Brian Newberry in the Valley Breeze last week, “are, in the end, not a business.” His submission was about 38 Studios, the most famous failure of the Carcieri Administration.

EG Town Council might shut down a 50 year old Main St small business


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normansHere’s the story of a man who has run a small business in downtown East Greenwich for more than 50 years who may lose his livelihood – a local institution and one of the hallmark properties on Main Street – because he fell behind on his sewer bill.

Norman Harris owns a dive bar/greasy spoon diner right in the heart of historic downtown East Greenwich and he is three-years delinquent on his sewer bills to the tune of $32,000. Some of that debt belongs to his business but the bulk of it comes from the five apartments connected to the restaurant that are occupied by family members.

The Town Council is threatening to revoke his liquor license if he can’t pay the debt in one lump sum.

Sharon Hazard, who runs the restaurant for her elderly father, told the Town Council that tough economic times plus a major money setback as a result of identity theft has left the family finances in shambles – and that they are even willing to remortgage their property to make the town whole. Still, she was berated by two of the elected officials.

Councilor Mark Gee lectured Hazard about how he too had faced hard times and never fell behind on his taxes. “To me it’s almost a little abusive to the town,” he said to her at a public meeting two weeks ago. Councilor Jeff Cianciolo forced Hazard to come back in two weeks with a title search, even though she told the Council she had already paid for one to be completed within the next two months. He wants the debt paid off in one lump sum. Council President Michael Isaacs was more understanding. He said, “We should exhibit some flexibility on this. I think they do need some time to work this out.”

Some see the Harris’ plight as just the cold, harsh realities of an unfriendly economy, and the delinquent sewer bill is the straw that broke the Harris’ business model. Others, like Councilor Gee, see it as a fairness issue; if you don’t have enough money to pay the town for your real property, you don’t get to keep your real property (unless you might turn it into a science center someday, more on this coming up).

And in the parts of town where Norman’s customers still live, a world away from the expensive track homes that constitute most of East Greenwich’s affluence, there are those who think it’s latent racism, class intolerance and a blatant attempt to socially engineer the Harris family off of Main Street.

The Harris’ are known locally as “the only black family in East Greenwich.” Of course this isn’t true, but it can certainly seem that way in lily white suburbia. As a point of fact, the Harris’ are bi-racial, and trace their roots back to the pre-Columbus Narragansett Tribe. (And other black people do live in town.) Perhaps more relevant than their skin color is their style. Many of the Harris’ just don’t look like modern day East Greenwich: think Swamp Yankee rather than soccer mom.

And their business attracts a rough crowd to an otherwise very gentrified center of commerce and community. I’d even go so far as to say the Harris’ can be a rough bunch themselves, and their tavern can be downright dangerous late at night. There’s a pool table, an ashtray out front and it serves cheap beer right across the street from a hotel that rents rooms by the week and/or month. People down on their luck get a room at the Greenwich Hotel, and find some friends across the street at Norman’s Tap. But that tale doesn’t always end well. The police are there frequently on Friday nights to break up fights.

It’s well worth noting that while Norman’s is a rough bar, it is not the roughest one in town. Some of the newer upscale bars and restaurants also draw a police presence on the weekends. The waterfront bars, which attract more affluent out-of-towners than the crowd that stay at the Greenwich Hotel, require multiple officers be stationed there throughout the evening (for parking and crowd control). And the only assault with a deadly weapon in recent years, a stabbing with a fork, happened in one of Main Street’s more posh eateries.

And as far as their debt is concerned, or it being some sort of affront to the community that they have let it fester for so long, I was personally more offended when Don Carcieri left vacant for 12 years (and counting) a piece of prime real estate the town gave him because he said he would turn it into a science center. No public lecture for the Republican former governor from the all GOP Town Council though.

So why do the Harris’ receive such harsh treatment from some on the town council and many more on the internet? Why would the Town Council consider destroying a local business that has been operating on Main Street for 50 years because of the three years of debt? What public good would be accomplished by taking away their liquor license?

There is absolutely a number of very influential local conservatives who think Main Street and the downtown economy would be well served if Norman’s Tap would just go away. Whether or not they are right is beside the point. A delinquent sewer bill should not be used as a tool to take away someone’s livelihood simply because some influential Republicans think more gentrification will make for a better community.

RI – What Went Wrong: The Carcieri Effect


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It may be hard to remember now, but ten years ago, Rhode Island’s unemployment rate was below the national average. Today, of course, it’s the second highest in America. Only Nevada has a worse jobs picture. Clearly, something went very badly wrong. The question is what.

In a multi-part series that will be published throughout this week, I’ll get into the weeds on the specific reasons Rhode Island fell behind. A common theme will be how so many (but not quite all) of the problems originated with the man who is now, as Scott MacKay puts it, “retired in his Saunderstown manse by the sea, hiding from the media and the taxpayers he so avidly fleeced.”

Rhode Island and U.S. unemployment rates. Data from Bureau of Labor Statistics, via Google Public Data.

Donald Carcieri

A cursory glance at the unemployment rate graph points to a likely culprit. What is perhaps most striking about Rhode Island’s decline is just how closely it corresponds with the tenure of Donald Carcieri. In his first few months, Rhode Island performed reasonably well. As America surged to the peak of the first Bush recession, unemployment jumped half a percentage point between January and June of 2003, but in Rhode Island, unemployment inched up by only 0.2 percentage points.

But giving Carcieri credit for his first few months makes about at much sense as blaming Obama for losing jobs during his first few months. The real test of a leader is how the economy performs once their policies have had a chance to take effect. In mid-2003, things began to turn around. Although America’s recovery was relatively anemic, with the unemployment rate falling by only 1.9 percentage points from the peak of 6.3% in June of 2003 to a low of 4.4% in March of 2007, things went much worse in Rhode Island. During that period, unemployment in our state dropped by only 0.7 percentage points, from 5.5% to 4.8%. In June of 2005, we crossed the national rate. Our jobs picture has been below average ever since.

Up through early 2007, Carcieri’s Rhode Island was in a slow, but not unprecedented, decline. State economies fluctuate, and our slide in the mid-2000s was nothing out of the ordinary. But things were about to get worse. A lot worse. In late 2007, the bottom fell out of the Rhode Island economy, and unemployment soared.  Surprisingly, much of the damage was done before the broader US economy began to collapse a little less than a year later.

By April of 2008, when the second Bush recession began in earnest, Rhode Island’s unemployment rate was already at 6.9%—far above the national rate of 5%. Over the next few years, that gap widened from 1.9 percentage points to a peak of 3.3 percentage points in April 2012, but most of the damage was done before the national recession even began. Clearly, something very, very bad happened in Rhode Island in 2006 or early 2007 to spark this collapse.

There is no magical fairy who pummels the economy whenever conservative Republicans find themselves in office.  What devastates the economy is the policies they enact.  Tomorrow we’ll begin to dig into the details of those policies and why they were so destructive.

Progress Report: Tax Capacity and Our Failing Cities; Chafee Speculation; Ucci and Blazejewski; Stripped Bass; Burnside


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Ambrose Burnside

Regardless of where you sit on the political spectrum, most agree that Rhode Island’s biggest concern should be the failing finances of our urban communities. GoLocal reports this morning in a piece on which local communities have the highest tax rates: “Some of the most dramatic increases are in urban communities facing financial distress. They also happen to be the places where taxpayers can at least afford the hikes.” This point, as well as those making it in the GoLocal piece, should be very familiar to our readers.

When Don Carcieri and the General Assembly cut income taxes for the affluent and state aid to cities and towns, it was like pouring gasoline on the smoldering fire that is Rhode Island’s regressive reliance on property taxes to fund public services. Gov Chafee and the 2013 legislature would do very well to address this.

That is, if Chafee doesn’t take a job in the Obama administration, as I’m hoping happens. Chafee would be a great Obama appointment and it would give him a classy exit from his unpopular reign as governor … it would also give Rhode Island a progressive governor in Lt. Gov. Elizabeth Roberts. This good idea came courtesy of Dee DeQuattro’s blog, which always has interesting stuff like this in it.

Much has been made about the legislature’s shift to the left, but one way the House will move right is with the promotion of Rep. Stephen Ucci, who is expected to replace Rep. Paddy O’Neil on Gordon Fox’s leadership team. Ucci is a nice enough guy, but he’s an anti-choice Democrat. This effect will hopefully be mitigated if Rep. Christopher Blazejewski moves up to be Deputy Majority Whip.

Is Gina Raimondo less confident in pension cuts prevailing in court than she once was? Seems like it…

Today’s hero: Nick Gibbs catches a 58-pound stripped bass from a Narragansett Bay beach and donates the giant catch to the Amos House in Providence “where it was made into fish chowder to feed hundreds of people in need.” I’m sure we’d all love to know where he caught it but the article doesn’t say…

Former PC hoops star God Shammgod deserves the award too!

Wow … what a great passage in this ProJo editorial about the insurance lobby, climate change and how hurricanes affect the affluent coastal land owners the most: “Contrary to the clichés about ‘welfare queens’ and so on, federal programs skew heavily in favor of middle- and upper-income people.”

So long Tea Party, don’t let the door hit you on your way out!!

Thanks to Dan McGowan for recognizing the RI future crystal ball … but we supported plenty of people who didn’t win, most notably Abel Collins.

On this day in 1862, General Ambrose Burnside, a Rhode Islander for whom the downtown Providence park is named, took command of the Union Army.

Carcieri on Negative Campaigns, Casinos and Clean Water


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Of all the journalists former Governor Don Carcieri didn’t want to see at the polls today, I’m sure I was high on that list given all the grief I’ve given him over 38 Studios. But to his credit, he answered my questions (after, I should add, I pleaded with him that it would mean a lot to the small business I’m trying to get off the ground).

I was surprised how candid he was about the negativity in Brendan Doherty’s campaign.

In this one he talks about the casino referendum, the clean water and open space bonds (which he didn’t really want to talk about!) and whether or not he supported any Democrats this election year.

Don Carcieri: Short on Apology, Long on Advice


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Former Governor Don Carcieri being interviewed by WPRI’s Tim White in an exclusive interview. (Screen shot courtesy of WPRI)

Give Don Carcieri, the unequivocal architect of the 38 Studios deal, credit for at least two things.

One is that the former governor finally came forward and faced the public. He should have done so four months ago, but we panned him when he didn’t so we’ll recognize that he did. The other is that he did so with Tim White, the go-to guy when a politician needs to publicly apologize.

But that’s as much credit as he should get, if not more.

He hardly took ownership of the fiasco for which he is largely responsible. He parsed himself as being one of 12 members of the EDC board who decided to back Curt Schilling’s video game company with taxpayer dollars. In reality, it was his idea to court Curt here with a giant loan guarantee. He didn’t just vote for it, he dreamed up the idea.

But that wasn’t even Carcieri’s slimiest statement of the night. That moment would be when he suggested the state default on the loan rather than repay it. After all, he argued, it’s only a moral obligation bond.

“All I’m saying is this is not an absolute slam dunk obligation for the state,” Carcieri told WPRI.

Bonds or otherwise, moral obligations matter when doing the people’s business. And Carcieri’s ambivalence to this may well be one of the reasons he failed so mightily as a public official and made such a bad gamble with regards to 38 Studios.

Besides, the people just wanted an apology … I didn’t hear anyone ask Don Carcieri for any advice on how to get ourselves out of the mess he created for the state.

Don Carcieri’s 38 Studios Silence: Selfish and Foolish


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It turns out even Republicans are miffed at Don Carcieri for hiding from the media when one of his signature decisions as governor blew up in the face of Rhode Island.

“Former Gov. Donald L. Carcieri’s long silence on the 38 Studios bankruptcy wound up putting fellow Rhode Island Republicans on the spot this week at Mitt Romney’s nominating convention,” wrote correspondent John Mulligan in today’s ProJo. “Carcieri, the delegation’s most prominent exponent of running a government according to sound business principles, declined to be interviewed Wednesday about his role in a state-backed loan guarantee for former Boston Red Sox star Curt Schilling’s company. The failed deal may leave Rhode Island voters on the hook for up to $102 million.”

That Carcieri broke his long silence on the 38 Studios debacle once it “wound up putting fellow Rhode Island Republicans on the spot” speaks to our post on Carcieri from Thursday in which we wrote: “Carcieri always represented conservatives first and then Rhode Islanders somewhere after that.”

Carcieri broke his silence on 38 Studios not when Rhode Island was most desperate for answers about it, but when Republicans were most desperate for cover.

Apparently that cover didn’t come quick enough.

Because Carcieri thought he could dodge the issue indefinitely, it ended up becoming a story when other Republicans had to answer for him. So not only was Carcieri’s tack on 38 Studios selfish, it was foolish too.

Here’s what some prominent Republicans told Mulligan about how Carcieri handled the situation:

“I would probably have spoken about my role” in such a loss of taxpayer dollars and Rhode Island jobs, said John Robitaille, Carcieri’s former communications chief.

“A lot of people are wondering” what went into Carcieri’s “business judgment” that the 38 Studios venture was a good investment of Rhode Island tax dollars, [Cranston Mayor Allan Fung] said.

Rhode Island’s incoming GOP national committeeman, Steven Frias, said Carcieri’s support of Schilling’s video venture will dog the state’s Republicans for a long time…

 

Carcieri Always Represented Conservatives, Not RI


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It should come as no surprise to see former Governor Don Carcieri, the architect of the 38 Studios fiasco, yucking it up at the Republican Convention even though he has yet to answer questions about his role in state’s biggest economic blunder in a generation.

After all, Carcieri always represented conservatives first and then Rhode Islanders somewhere after that. We’re talking about a governor who gave more interviews to WPRO shock jocks than the rest of the local media combined!

But, like Scott MacKay of RIPR, we were surprised that Carcieri had the gall to be offering an economics lecture to President Obama. Here’s how MacKay put it:

Well, governor, what say you about a purported conservative Republican  Rhode Island governor who gambled with the taxpayers money, made the most reckless  crony capitalism economic development loan in the state’s history (38Studios, which is now bankrupt) and left the taxpayers hanging for $100 million in loan guarantees. Then this very same governor leaves office, goes into virtual hiding, refuses to answer to anybody to justify his actions and finally turns up in Tampa at the Republican National Convention to lecture the president on business.

The reality is many of Rhode Island’s economic sore spots are Carcieri’s fault. 38 Studios is only the most obvious example. Another is the state’s epidemic of failing cities. When Carcieri cut off state aid to the state’s poorest communities he virtually guaranteed at least some of them would have no other option than to go through an expensive reorganization.

As governor, he also focused his energies on cutting the state payroll instead of growing the state economy. And he fought really hard against obvious economic development winners like a casino and a port at Quonset.

One missed opportunity that few people recall is when Carcieri had the old Jamestown Bridge demolished instead of turning it into what would have been one of the most beautiful – and probably well-visited – bike paths in the world. Environmentalists and transportation advocates fought hard for the idea at the time, though the local media largely ignored the idea. Imagine how many additional people who visit and vacation in the Ocean State if they could ride their bikes from the South County beaches, through scenic Saunderstown over Narragansett Bay and right out to Beavertail and Fort Wetherill.

It’s well worth noting that Carcieri had a beach house in Saunderstown  – it’s his legal address these days, though we get the feeling he spends more time at his place in Florida than in Rhode Island – and many of the uber-affluent residents on both sides of the bridge deplored the idea of sharing their slice of Rhode Island with the masses.

The best thing Carcieri probably did for Rhode Island is give us proof positive that business acumen doesn’t translate to political acumen.

And now here is campaigning for a businessman for president.

That should be all the evidence Rhode Island and the nation needs to know that Mitt Romney is the wrong guy to be president. After all, Carcieri has proven no more effective at picking winners in politics than he has in the video game business.

Progress Report: RI Is Most Democratic But Not So Liberal; RISC Dumps Don Carcieri; Gamblers Need New Casino


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We may be the most bluest state, according to a new study done by Gallup, but keep in mind that distinction doesn’t mean any more than the D after Jon Brien or Doc Corvese’s name on the ballot.

Especially in the northern parts of the state, Rhode Islanders will instinctively vote for Democrats, even if like Brien and Corvese, their politics are more-closely aligned with the GOP. That’s why we call it the Democrats in Name Only.

Speaking of not staying true … it seems that things have gotten so bad for former Gov. Don Carcieri that not even the conservative-leaning Rhode Island Statewide Coalition, which held its annual summer meeting this weekend, is willing to stand behind their former champion anymore.  For the past several years, it gave out an award called the Donald L. Carcieri Award for Good Government. Not this year, though. Wonder what happened?

On Friday I wondered aloud if anyone would be willing to stick up for gay-bashing congressman Allen West who was in town this weekend to raise money for local Republicans. It turns out Michael Riley, running against Jim Langevin, not only supports him but thinks he should run for president. Here’s what West once said about progressives: “I believe there’s about 78 to 81 members of the Democrat Party who are members of the Communist Party. It’s called the Congressional Progressive Caucus.”

Compulsive gamblers better hope Rhode Islanders pass a casino referendum this November … if we don’t, public money for their addictive habit will dry up. So, in other words, the state is only interested in funding gambling cessation programs if we can also make it much easier to gamble…

For the first time Narragansett Beer will be available outside of the East Coast as the 130-year-old lager will now be brewed in Wisconsin as well as the East Coast. Hi, neighbor indeed.

Anyone who cares about Narragansett Bay or the culture of quahogging in the Ocean State should read my friend Ray Huling’s book, which EG Patch did a great feature on. It’s a great read about how we allowed one of the state’s best resources to nearly fall off the map up until they get fried and sold out of a clam shack.

The produce grown at the Charlestown Community Garden goes to help feed the less fortunate in South County.

RI Needs to Learn from Mistakes of 38 Studios Deal


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To the 379 people who just lost their jobs, I want to say something that no one responsible for this turn of events is going to say: I’m sorry. I doubt that will make you feel better, but I think it needs to be said, by someone. You moved yourself and your families down here, you put your work into an artistic endeavor, and I’m glad you work in an industry that is so good as to reach out to you immediately (although I hear that unless you work for Valve, your work hours are crazy). I wish you luck, and I hope you create great things in the future.

That said, the politics behind this whole thing has been atrocious. It was championed by both the former Gov. Carcieri and House Speaker Gordon Fox, which despite their different partisan labels, found some common ground in it. It displays that there is now a reckless disregard for the very real impact of the decisions that happen in the State House on the people of Rhode Island.

Everyone with an iota of power who is involved in the direction of this state needs to spend the summer discussing what’s happened over the last two years, what failed, what worked, and what needs to be done. I don’t care if you want to kill each other at the end, as long as it makes you more effective. The citizens of Rhode Island are more important than your feelings, and they deserve better.

To the officers of the General Assembly, please remember these cheery facts: in 20 years, people will have difficultly remembering your names. In 40 years, only historians doing research will. Your personal prestige needs to be subsumed into the idea that you need to make the best decision for the state.

No one should want you to fail. No matter your political affiliation, the issue is that you need to be the best you can be. And right now, you’re not. I don’t have the answers, and I can’t tell you how to do your jobs (though I think doing them full-time and for reasonable pay wouldn’t be a bad idea).

There was a lot riding on 38 Studios that shouldn’t have been. But this deal was opposed by the people of Rhode Island, and the more I compare the polls to the actions of our government, the more I wonder whether Smith Hill just lives in a different state.

President Obama and the Imaginary Spending Binge


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Recently, I did something I shouldn’t have done, and I’d like to confess here.

Someone I don’t know wrote me a nice note about some things I have written and some banking issues I’m working on (more on this someday). In the process of the note, he described himself as moderate Republican, “fiscally conservative and socially liberal.”  This, it turns out, is one of my buttons because it implies that usually liberals aren’t fiscally conservative.

The idea that liberals are spendthrift is little more than an insult that has stuck over time due to incessant repetition rather than evidence. It wasn’t liberals who brought our nation to the brink of financial ruin in 2008. It wasn’t liberals who doubled Rhode Island’s debt 2003-2009 for no good reason. It wasn’t liberals who created the fiscal crisis that has bankrupted one Rhode Island city and threatens several more. In all of these cases, it was either soi-disant fiscal conservatives or crony insiders who did all of it and I, for one, am completely sick of having to feel apologetic about my policy preferences. Medicaid is a money-saving program, as is welfare, early childhood education programs, environmental protection, and a lot more like those. The fact is that every progressive I’ve ever had a policy conversation with should be described as fiscally conservative, and yet the stereotypes persist, due to lazy reporters and politicians who benefit by perpetuating it.

So I was pleased to notice this article yesterday that pointed out the grim reality.  You know that Obama spending binge you read about, when he came charging into office with a mandate and a Democratic Congress?  Never happened. The article points out that on an annualized basis, spending under Obama is up about 0.4% per year. Of course it’s true that the 2009 fiscal year included Obama’s stimulus package, even though he took office part way through that year, with the budget already passed. But even if you count the stimulus, spending is up 1.4% per year under this president. Compare that to 7.3% per year in Bush’s first term, and 8.1% per year in his second.

The article has a great bar chart comparing the fiscal records of the last few Presidents. Because I think he’s unjustly maligned, I checked out Carter’s numbers, too, and after adjusting for inflation, spending increased less under his administration than under Reagan’s.

Why is the federal deficit such a huge problem?  Because of tax and spending decisions made under George W. Bush. Why are cities and towns in Rhode Island either bankrupt or flirting with it?  Because of spending decisions made under Don Carcieri. Obviously Congress and the General Assembly have had a lot to do with this, too, but it wasn’t liberals in Congress who voted for the Bush tax cuts, the Medicare drug benefit, or even the Iraq War resolution. And it wasn’t liberals who doubled the state’s debt (mostly without voter approval), loaned $75 million to Curt Schilling, and came up with all the different tax cuts for rich people passed over the past 15 years. Some liberal members of the General Assembly cast votes for budgets containing those tax cuts, but that’s the way this Assembly is run, and many have supported floor amendments to the budget to overcome those cuts. (Of course the current Speaker of the House has been known to describe himself as liberal, but the public record hardly supports that, and I notice he’s stopped doing that, at least to the reporters whose work I read.)

Is there spending I support that isn’t getting done?  Of course there is. I support actually doing maintenance on our assets — because it’s cheaper than not doing it. I support health care reform — because it’s cheaper. I support early childhood education — because it’s cheaper. I support a cleaner environment — because it’s cheaper. I support taxing enough so our governments don’t require short-term borrowing — because it’s cheaper. Get the picture?

Obviously this isn’t the only reason to spend money. Helping support the poor and disabled is not necessarily cheaper than letting them die on the streets, but bodies lying about would damage the feng shui of our cities. Government has a role in counter-cyclical spending, to keep the economy moving during a downturn. You actually can make cost-benefit arguments about both of these, but they rest on shakier numbers, so why not just go with the alleviating human suffering angle?  Parks and beaches are cool, historically the arts have never thrived without government patronage, and I wouldn’t try to justify the Smithsonian on cost/benefit grounds, either. But overall the picture of spendthrift liberals is little more than a libel, perpetuated because fulfills some rough conceptual framework, and because some people imagine that being fiscally conservative means you don’t have to pay for stuff.

Which is all to say that I apologize to my correspondent for snapping at him for what was otherwise a perfectly pleasant note.

Stokes, Schilling Take Hits but Carcieri Is to Blame


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While Keith Stokes might be the one to have lost his job and Curt Schilling might lose his business, the person most responsible for the 38 Studios financial fiasco is former Governor Don Carcieri.

The CEO governor billed himself as having the business background necessary to boost the economy and create new jobs. But as it turned out, Carcieri was the worst steward of the state’s fiscal situation in a generation or more.

He’ll now be forever remembered as the one who wanted the now-infamous guaranteed gamble/guaranteed loan to 38 Studios which seems almost guaranteed to fail. And this comes on the heels of Rhode Island finally recognizing that his aid cuts to cities and towns simply pushed the burden onto local property taxes, an added expense that the poorest cities in the state couldn’t withstand.

Carcieri’s credibility is literally vanishing before Rhode Island’s eyes.

Almost as soon as mayors and media pundits started to blame Carcieri’s cuts for the financial struggles of our highly distressed cities, his swan song and biggest economic achievement, the dreaded 38 Studios deal, seems likely to enter the annals of fiduciary disasters.

The last guy to cause Rhode Island so much fiscal pain was Joe Mollicone, and he only made off with $13 million. Carcieri’s got that beat more than five times over. In fact, Carcieri’s ill-fated decision to invest nearly $100 million in an ex-baseball player’s ability to develop video games could cost the state about a quarter of what it saved on pension reform this year.

Speaking of which, there are those who blame Carcieri for exacerbating the pension problems in Rhode Island, too. When he laid off state workers, he drastically reduced the number of people paying into the retirement system while more people were retiring than ever.

One has to wonder what Carcieri was thinking – I mean, I can’t imagine he would have made this loan when he was working in the private sector at Old Stone Bank so why did he do so when he was working for the public sector? Was he star struck by Schilling? Is he a secret video game junkie? Did he actually think this was a good deal for the state? Of course hindsight is 20/20, but it seems the only thing that makes sense is that Schilling sold him snake oil.

Ironically enough, prior to the 38 Studios debacle, Carcieri’s biggest public blunder was having the Narragansett Indians beat up for not paying taxes on cigarettes they were selling while opposing their efforts to develop a casino. But a casino would have generated twice the number of jobs as 38 Studios and the taxes the smoke shop owed paled in comparison to what Carcieri invested in 38 Studios.

It’s all evidence that CEO’s don’t necessarily make for good government leaders. The two jobs just aren’t the same. Carcieri was a great executive (and he’s a really nice guy) but he was a disaster as a governor. It will be interesting to see if he remains a visible part of Mitt Romney’s presidential campaign. Romney, another CEO governor, had the good sense to at least act like a moderate while he was the governor of Massachusetts. Carcieri never seemed to realize that politics is the art of the possible, not of the ideological.

38 Studios and the ‘Job Creator’ Logic


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Kingdoms of Amalur Cover
Kingdoms of Amalur Cover
(via Wikipedia)

Word started buzzing around the State House just prior to Gov. Chafee making his historic executive order recognizing same sex marriages from other states – but the rumors weren’t about marriage equality, they were about 38 Studios.

By the end of the day, Bill Rappleye of Channel 10 broke what very well could become the biggest story to date of 2012: the state is working with 38 Studios to help keep it solvent.

38 Studios, former Red Sox Curt Schilling’s company, was given a $75 million guaranteed loan to move from Massachusetts to Rhode Island by former Gov. Don Carcieri. The former CEO governor, who always touted his business experience as reason to trust him as a public official, pushed through the highly controversial loan to his friend and political ally as a way to shore up his otherwise poor economic development record while in office.

It worked; whatever happens to 38 Studios, Carcieri owns it.

One needn’t to be a business expert to know that investing in 38 Studios was a risky proposition. In fact, our own Sam Howard detailed why it was in a post earlier this year. 38 Studios has made some money on its new single player game Kingdoms of Amular. But the project Rhode Island is vested in is a huge multiplayer game called Copernicus. Howard points out here why the former is a much safer investment than the latter:

“…one of the things that [Amular] had going for it was that it’s single-player. Single-player games are like novels, in a lot of ways. People are more willing to get into a new one. But [multiplayer games] are in a lot of ways like a bowling league. Once you’re part of one, why join another?”

Indeed, business experts knew this was a risky investment as well. Ted Nesi reports: “Last June, PricewaterhouseCoopers audited 38 Studios and issued a “going concern” opinion that expressed “substantial doubt” about whether the company would be able to stay solvent, the disclosure filing said.”

Why didn’t Carcieri, who was lauded for his business acumen, see this? Why didn’t Keith Stokes, Carcieri’s economic development chief who lauded the loan and was then kept on by Chafee, even though the current governor vociferously argued against granting 38 Studios the risky loan? Why didn’t taxpayers? Where was the Tea Party on this one?

Why might not matter now. What matters most is how to protect the state’s investment, and its economy.

In the meantime, as the local media has been looking for the “next Central Falls,” Rappleye might just have stumbled onto it … but this time there will be no way to argue that pensions or union contracts are the problem. This time the issue seems squarely to be that the public servants simply placed too much faith in private sector.

Curt Schilling was supposed to be the state’s ultimate job creator. It’s high time Rhode Island realizes that, whether it’s tax cuts or tax giveaways, such an economic strategy is far too risky keep placing so much blind faith in.

RI Progress Report: Property Taxes, Jason Pleau, URI Contracts, Gemma, the Mob and Occupy Providence


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Here’s a list of the 19 cities and towns that are considering raising taxes in next year’s budget, according to a great article by Dan McGowan, of GoLocal: Bristol, Charlestown, Cumberland, East Greenwich, Hopkinton, Jamestown, Little Compton, Middletown, Narragansett, New Shoreham, Newport, North Kingstown, North Smithfield, Portsmouth, Richmond, Smithfield, Tiverton, Westerly and Woonsocket.

He quotes conservative mayor Dan McKee of Cumberland as putting the blame squarely on the shoulders of former Gov. Don Carcieri: “The former Governor claimed he needed to cut funding to teach cities and towns a lesson,” McKee told McGowan. “His assumptions were not grounded in fact.”

At least if URI professors would have gotten their raises, tuition hikes would pay for something. With salaries now effectively frozen, tuition increases will pay only for the state to not fund state schools. It’s all part of a growing trend to make the University of Rhode Island into the University in Rhode Island.

Almost three months to the day, the Catholic church is closing a day shelter that Occupy Providence won in negotiations with the city in exchange for ending its encampment in Burnside Park. Occupy Providence agreed to leave the park if the city ran a day shelter for the homeless for at least three months.

The question now is whether Gov. Chafee will appeal the Jason Pleau decision to the US Supreme Court. He has 90 days to decide. In the meantime, “it is wrong for the federal government to impose on our state a policy that Rhode Island eliminated more than a century and a half ago,” said Steve Brown of the RI ACLU. “The ACLU and other groups opposed to the death penalty will continue to urge that the federal government drop any plans to proceed with a death penalty case against Pleau, who has already agreed to serve a sentence of life imprisonment without parole.”

Ted Nesi reports that Anthony Gemma will soon be holding a press conference to introduce new staffers … still no word on whether or not Gemma knows what a press conference is or how one is supposed to work.

Don’t tell the local media this, or our shared cultural understanding of this state, but the mafia in Rhode Island is no longer all that influential.

Meanwhile corporate America made a record $824 billion last year as pretty much the rest of the country floundered further into debt.

Congrats to Susan Lusi, the interim superintendent who was just named the permanent head of the Providence school system.

Budgeting for Disaster VI: DMV Manages for Success


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FY2013 budget

FY2013 budget

One part of the Department of Administration that gets a lot of press is the Department of Motor Vehicles, which is actually a unit of the Department of Revenue. DMV, of course, gets press because people don’t like it, and the lines are long, and it’s in an inconvenient place, and so on and on.

Over last spring and summer, the agency saw a turnaround. Spurred on by stories of multiple-hour wait times, Governor Chafee appointed a new director, who made some management changes, shuffled people around, re-engineered the lines, put “greeters” out front to explain things, closed some satellite branches, and generally shook things up. Lo and behold, the wait times plummeted. An inspiring tale of how good management can make all the difference? A story of re-inventing government to do more with less in the 21st century? Well sort of, but not quite.

Watching the ticking clock in line at DMV has been a part of life for all of us in Rhode Island for a long time, but it’s not right to say that it’s been a neglected problem. Lincoln Almond suggested adding $300,000 per year to expand their hours, and Don Carcieri made a point of “fixing” it, too. He even listed new efficiencies and reduced wait times as one of his accomplishments in a 2004 interview.

But time went on and service decayed until it took hours just for routine business to happen. I waited there with my daughter for three excruciating hours one fine day in 2010, along with about three hundred good friends. By the time Lincoln Chafee took office, DMV was a joke, a travesty of government service. Chafee brought in a new interim director, Lisa Holley, to troubleshoot the agency, and — what do you know? — she got results. Wait times shrank dramatically and while it’s still hard to describe a visit to the DMV as a pleasure, the last time I was in one, last August, I was in and out in 25 minutes.

So what happened? What management magic did Holley bring to the agency? What lessons can we learn? Mostly just that it takes people to do the work.

In the dark days of 2004, when Don Carcieri was taking credit for improving wait times, he was adding employees, and adding satellite locations. You can see the progress in the graph to the right, which counts customer service representatives in the department. Service got better with the new workers, and a little worse with the satellite offices. But then around 2006, Carcieri decided it was ok to let the service decay a little bit. He said the state had too many employees, and he started to enforce the statewide hiring freeze on DMV. And then the retirement fiasco of 2009 came, and a bunch of people left, and so in 2010 you had all the satellite locations, and 22% fewer people to stand behind all those desks.

And that’s the crazy thing about management by attrition: you don’t get to plan for the loss of people. Carcieri simply said we’re not hiring any new people and we’re going to encourage people to retire, and that’s that. The only surprise was that people were surprised that service suffered — a lot.

So again, what management magic did Holley bring? She insisted on having more people, that’s what. Chafee asked the Assembly for 25 new workers. They balked, but they did cough up some, and so now there are almost as many people on the customer-facing staff as there were in 2006, at half as many locations. Of course there were some other improvements: line management systems, those greeters, a redivision of labor. But sometimes the big story is the simpler one: we got better service with more people.

There is another story I see lurking here. Governor Chafee saw a problem of poor service and acted to fix it, while Governor Carcieri saw the problem in terms of taxes, and acted to fix that instead, mostly by giving tax cuts to rich people. How did that work out for you?

There is one other feature to the DMV budget that should not go unremarked while we’re here. The RIMS computer system that was supposed to create a whole new class of efficiencies by getting all of DMV’s information about you in a single database is quite a bit behind schedule and over budget. This is pretty much SOP in the database development world, public and private. That is, it’s a shame and a waste of state dollars, but it’s not exactly unprecedented. I bring it up at least in part because you can’t exactly see it in the budget presentation, but you can see it in the Capital Budget, which we’ll get to soon.

NEXT: The Quasi-Publics
Read the previous posts in this series

Chafee: State Aid Cuts Put Poor Towns in Peril


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Governor Chafee said state aid cuts to cities and towns is a primary reason Rhode Island's poorest communities are struggling.

Governor Chafee said former Governor Don Carcieri and the General Assembly put struggling communities in peril when they cut some $195 million in state aid to cities and towns.

“It’s no wonder Providence is in trouble, it’s no wonder Pawtucket is having a trouble making payroll, it’s no wonder Central Falls went into bankruptcy,”  he said after speaking at a conference on the state’s economy at Bryant University today. “They just couldn’t sustain those kinds of cuts. There is no property tax base to transfer those kinds of cuts onto.”

Chafee said Carcieri and the General Assembly essentially balanced the state’s budget by taking money away from cities and towns – a move that he said the state’s wealthy communities could withstand but the poorer communities could not.

“I thought it was the path of least resistance,” he said. “That way they could go and say we didn’t raise taxes but at the same time they did raise taxes on the property tax payers of those communities. It was a little disingenuous to say we’re not raising taxes when you are passing it down to the property tax payers of the distressed communities.”

He said he would be unveiling a bill “later this week” that will help Rhode Island’s cities and towns. In addition to including enabling legislation that will allow cities and towns to rework annual pension increases as well as addition funding for local school districts. The additional school spending, he hopes, will be paid for by his proposed increase in the meals and beverage tax.

His bill will also include, he said, relief from state mandates for some of the state’s poorest communities, such as Providence, Pawtucket, Woonsocket and West Warwick. Other communities could be included as well, but he indicated it would not provide mandate relief for every community in the state.

He wouldn’t say which mandates would be included.

“It’s the usual suspects,” he said. “They are the ones that many of the town managers and mayors have been talking about for decades.”

State Cuts Also Cause for City’s Fiscal Woes


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It’s certainly fashionable to blame retirees and their generous post-employment benefits for Providence’s fiscal problems. But for other causal factors, look to the state of Rhode Island and former Governor Don Carcieri.

Tom Sgouros, in his ongoing series dissecting the state budget, reports this morning that in 2008 the capital city was expecting $65 million in state aid from the General Assembly. But over the next two budget cycles Carcieri cut so much from aid to cities and towns that he effectively striped Providence of 10 percent of its annual operating capital.

Libby Kimzey, a frequent contributor to RI Future who is running for a seat in the State House to represent Federal Hill and Olneyville, put it pretty bluntly a few weeks back when giving a presentation about state budget cuts to Providence:

“Right now the State of Rhode Island is being a jerk to Providence,” she said, noting that the state cut some $28 million to the capital city over the past three years. Interestingly, that’s more than the city would need to be back in the black financially. “If you think about it, that is really in the same ballpark as that $22.5 million that is in the papers right now.”

“That is money that the city was counting on from the state,” she said. “Those are decision that state lawmakers have made that put the city in the position of closing schools and we’re having this whole conversation about cutting retirees benefits and it just gets me really worked up.”

Sound Fair to You?


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Cities and towns across Rhode Island have faced financial hardship over the last several years. Cities have been devastated by the economic crisis, which itself was caused by a complete lack of oversight on Wall Street, oversight that even today Republicans are fighting tooth and nail. They even oppose the idea of having an agency whose job it is to protect consumers and prevent such a collapse from ever happening again.

Now comes a Congressional candidate who has called for the capital gains tax to be dropped to zero, a policy that would mean his endorsed presidential candidate, Mitt Romney, would pay not a dime in income taxes. So, it was surprising to see Carcieri protégé and Romney supporter Brendan Doherty weigh in on the current Providence budget crisis by calling for “tax fairness.” Sound fair to you? He has even argued for slashing corporate tax rates from 35% to 22%. That’s right, Doherty has called for corporate taxes to be even lower than proposed in the Paul Ryan budget plan that the Tax Policy Center estimates would cost taxpayers almost a trillion dollars over the next decade.

While Doherty is running on a platform of trickle-down economic policies that helped create the economic crisis which so weakened municipalities, he makes no mention of the need to scale back the outrageous COLAs given away in the 1990s. Nor did he acknowledge the role his mentor and major fundraiser, former Governor Carcieri, played in slashing aid to cities and towns, shifting the burden to local communities while still leaving the state with a huge budget shortfall.

Doherty has shown a lack of understanding of what has really been happening to cities and towns across Rhode Island and his plans of more big giveaways to corporations and millionaires and billionaires is exactly the wrong approach to get our state and country back on track.

Doherty has been quick to dismiss any critique of his far-right policies as partisan rhetoric but the fact is that policy differences matter. Doherty supports the same economic proposals as Carcieri and Romney that have done so much damage to our local and national economies. This upcoming election will offer voters a choice as to whether they want to send someone to Washington who will side with the wealthiest Americans and corporations or whether they want a representative who will stand up for the interests of seniors, students, small businesses and the middle class.

 

Carcieri Failed to Pay Property Tax on Florida Condo

UPDATE: So much for the “it went to the wrong address” defense. From the Projo:

However, the litigation and collections manager for Martin County said yesterday that the office sent the bill to the correct address last December after a clerk did a little research and found Carcieri’s current address on Kenyon Avenue.

It is also nice to see the little blog that could get a nice plug in the Palm Beach Newspaper.

Crossposted at DAILYKOS.  RI’s 12lth, who helped break the story, has an Islander’s take on it! 

UPDATE: ABC 6 and NBC 10 are reporting that Carcieri has cut a check tonight!  Projo has the story now:

The matter came to light yesterday in a piece written by Patrick Crowley, the assistant executive director of the National Education Association’s Rhode Island unit, and posted on the political blog www.rifuture.org.

After Republican presidential candidate John McCain had trouble answering a question about how many houses he owned, Crowley wrote that he asked the same question about Republican Governor Carcieri. Crowley wrote that Kempe directed him to the financial statement that Carcieri had filed with the Rhode Island Ethics Commission.

Now the next question: Why didn’t Carcieri list both condo’s on his financial disclosure report?

***

Thanks to a comment in an earlier post, some digging has revealed Donald Carcieri has not paid taxes on a Florida condominium since 2005.  An official with the Martin’s County Florida Tax Department confirmed this afternoon that tax certificates, or liens, have been placed on the condo at 4540 Sand Pebble Trace, Unit 101, Stuart, Florida. The first lien for back taxes from 2006 is valued at $7,502.73.  The second lien for taxes owed in 2007 is valued at $5155.

The owners of record for the property are Donald and Suzanne Carcieri, with an address listed as 5 Pearl Street, East Greenwich.  The Martin’s County office was also able to confirm that a second property, Unit 201, is also owned by Donald and Suzanne Carcieri. Taxes are up to date on this property. The mailing address listed for this property is the Governor’s address at 50 Kenyon Rd in East Greenwich.  The Governor’s 2007 Yearly Financial Statement does list the condo property, but makes no indication as to whether or not it is one, or two, pieces of property.

An earlier email to the Governor’s office asking for clarification and comment was not returned.

The tax office website has records of the newspaper advertisement they placed in local papers revealing the tax lien.  The numbers are different due to the certificate sale process.