raimondo – Page 6

April 17, 2013April 18, 2013

Pensions, hedge fund managers, David Boies

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As Rhode Island considers whether Gina Raimondo is making a wise gamble with our money by moving more of public sector retirees’ pension account into risky hedge funds, the New York Times Dealbook blog reports that the S&P 500 stock index outperformed the average hedge fund for the fourth year in a row.

Swashbuckling bets and robust returns are exactly what investors are hoping for — and paying for in outsize fees — when they allocate money to hedge funds. But far too often in recent years, investors have paid hefty fees for lackluster returns.

And last year was no different.

For the fourth consecutive year, most hedge funds failed to beat the market. The average hedge fund gained 6.4 percent last year, according to a composite index that tracks 2,200 portfolios compiled by Hedge Fund Research.

By comparison, the Standard & Poor’s 500-stock index climbed 16 percent when factoring in dividends. In 2011, the average hedge fund lost more than 5 percent, versus a 2 percent gain for the S.& P. 500.

The Dealbook post also listed the 10 highest paid hedge fund managers, according to Institutional Investor Alpha’s annual “Rich List. At least two of whom Rhode Island invests a considerable sum of our pensioners retirement security with:

David Shaw made $530 million last year. According to public documents on the Treasurer’s website, Rhode Island invested $61,453,935 with his hedge fund called DE Shaw Composite Fund LLC.
Dan Loeb made $380 million last year. According to public documents on the Treasurer’s website, Rhode Island invested $62,998,187 with his hedge fund Third Point Partners Qualified L.P.

Loeb was featured in Rolling Stone magazine on April 11 about his crusade to take over more pension plans, and his lack of affinity for defined benefit pension plans.

Dan Loeb, who isn’t known as the biggest hedge-fund asshole still working on Wall Street (only because Stevie Cohen hasn’t been arrested yet), is on the board and co-founder of a group called Students First New York. And Students First has been one of the leading advocates pushing for states to abandon defined benefit plans – packages which guarantee certain retirement benefits for public workers like teachers – in favor of defined contribution plans, where the benefits are not guaranteed.

In other words, Loeb has been soliciting the retirement money of public workers, then turning right around and lobbying for those same workers to lose their benefits. He’s essentially asking workers to pay for their own disenfranchisement (with Loeb getting his two-and-twenty cut, or whatever obscene percentage of their retirement monies he will charge as a fee). If that isn’t the very definition of balls, I don’t know what is.

There’s an interesting connection here between hedge fund managers, public teacher pensions and the so-called ed. reform movement; StudentsFirst was founded by Michelle Rhee and she is also on the board with Loeb and other hedge fund managers.

But there’s another interesting local connection too: David Boies, the high-price super lawyer who is defending Raimondo and her pension plan at a great discount is also on the StudentsFirst board with Loeb and Rhee.

According to a Ted Nesi post from November, Boies agreed to defend in court the pension cuts to state workers and teachers for $50 an hour when he usually charges $960.

April 16, 2013April 16, 2013

Siedle says COLA cuts are paying Wall Street fees

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Forbes.com opinion blogger Ted Siedle has posted another piece highly critical of Gina Raimondo’s so-called reforms to the state pension system.

This time he suggests that the amount retirees’ cost of living adjustment was slashed might be just enough to afford the new fees being paid to the venture capitalists and hedge fund managers with whom Raimondo gambled the state’s pension fund.

The so-called “reforms” of the state pension in the Rhode Island Retirement Security Act of 2011, which include slashing the COLA, I’m told are projected to save $2.9 billion over 20 years. Suspension of the COLA is estimated to represent $2.3 billion of that savings.

I can tell you where that COLA savings is going—into the already-stuffed pockets of Wall Street’s most highly-compensated gamblers—almost dollar-for-dollar. By my estimate, $2.1 billion in fees (out of the $2.3 billion in COLA savings) will be paid by the pension to hedge, private equity and venture capital tycoons. That’s some “reform.” No wonder Wall Street is so eager to support this shameless public pension money grab.

Here are his other posts on Raimondo’s pension work:

April 14, 2013April 14, 2013

Conventional wisdom shift on Raimondomania

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I love that Ted Nesi kicked off his weekend column by invoking the concept of conventional wisdom. It’s a topic that came up often last week about why RI Future does what it does in the manner in which we tend do it.

Conventional wisdom, I explained to Ted in an email, is why I devote so many posts to critiquing the mainstream media (here in RI, one newspaper and one or two radio and TV stations each) and the marketplace of ideas (the rest of the collection of communicators who, from Twitter to TV, broadcast our thoughts): for good, bad or indifferent this relatively-random though not-all-that-eclectic chattering class is largely responsible for what the rest of the residents know about Rhode Island. We foment and solidify conventional wisdom.

Think about it: most Rhode Islanders don’t actually know the first thing about life on Smith Hill or local politics beyond the headlines, tweets and soundbites that the chattering class feeds them – some of whom themselves are getting their information second hand! I almost wrote a piece a few weeks back about how, of course, the media is responsible for Chafee’s approval rating – whatever it happens to be – the real question is whether he deserves the approval rating he has.

Conventional wisdom is also what makes Forbes blogger Ted Siedle’s posts on Raimondomania so politically consequential for Rhode Island. He wrote his first post in response to an Institutional Investor article that said she “defies conventional pension wisdom.”

But prior to the Siedle posts conventional wisdom in Rhode Island held that Gina Raimondo was a benevolent reformer who had enriched Rhode Island at the expense of the unions (which, by the way, the chattering class, as an organism, tries real hard to paint as Public Enemy #1). Sure, Mike Downey and I had publicly called her a Wall Street Democrat, but we’re part of what the chattering class by and large sees as the dastardly special interest known as labor. And, for what it’s worth, me and Mike are pretty easily dismissed by said chattering class…

…A Forbes.com columnist known as the Sam Spade of Money Management, not so much though.

The Siedle posts pointed out the indisputable fact that the manner in which Raimondo has invested the state’s pension fund will be a huge boon for the hedge fund managers and venture capitalists who get the work while many experts including Warren Buffett believe it is a bad bet for Rhode Island. That hadn’t been reported yet.

I believe the Siedle posts shifted the conventional wisdom on Gina Raimondo. Whereas it once held that she had taken from labor and given to the taxpayer, it now also holds that she then subsequently gambled that windfall with her Wall Street cronies who are the only guaranteed winners in ever-unfolding drama that conventional wisdom dubbed “pension reform” until Forbes.com called it “a money grab.”

April 11, 2013

Crucial Questions For Raimondo

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There are many important issues that Ted Siedle of Forbes raises about Gina Raimondo and what he calls her pension overhaul – avoiding the loaded term reform so often used by the local media.

Here are two that I’ve been asking on this blog for some time now.

One is that she is employing a very high-risk strategy that will definitely benefit Wall Street hedge fund managers and venture capitalists and might also be good for Rhode Island – though he and other experts are skeptical. Siedle told Buddy Cianci earlier this week that Warren Buffett has a “very public” $1 million bet that the S&P Index will outperform these more costly and riskier investments – in other words, Warren Buffett thinks Raimondo is wrong. Siedle says the state is paying more to money managers for the right to take this risk.

This is an issue with special resonance for progressives, as most of us strongly feel a giant problem with Rhode Island’s economy and American capitalism in general is that Wall Street comes first and everyone else gets in line according to how well they serve Wall Street’s interest.

The other issue, which has been raised locally, is that some members of Engage RI may have a financial stake in pension reform. See question 18 of his 22 Tough Questions For Rhode Island’s Pension ‘Reform’ Treasurer:

Do any of the contributors to Engage Rhode Island have any financial relationship, direct or indirect, with any of the investment managers of the pension? For example, do any contributors to Engage Rhode Island have assets managed by, or an ownership interest in, any of the pension’s managers or any fund managed by these managers?

These are both uber-important questions that all Rhode Islanders should want answered.

Raimondo doesn’t want these questions answered. Please re-read this post I wrote on December 13. In it, I point out that one the very same day in the Providence Journal, Raimondo tells Mike Stanton that she feels it’s okay for Engage RI members to be anonymous and Kathy Gregg quotes her as saying, “it is more important than ever that [a] treasurer bend over backwards to be transparent and open with our investors.”

So I made a public records request to Raimondo’s office on Jan. 8 asking for all of Raimondo’s communications with Engage RI members. I got a letter from Mark Dingley 15 days later, the treasurer’s legal counsel, informing me they wouldn’t even consider my request, unless I give them $435 first. Here’s what he wrote to me:

I would estimate that Search and retrieval will require thirty (30) hours at Fifteen Dollars ($15.00) per hour with the first hour free. See Rl. Gen. Laws 38-2-463), Accordingly, kindly provide pre-payment of Four Hundred Thirty-five Dolîars ($435.00).

Please be advised that payment does not guarantee that the records you have requested constitute public records (in Whole 0r iu part, i.e., redacted), but only authorizes this Office to conduct its Search and retrieval to determine if responsive records exist, and if so, Whether said records are public records. Should actual Search, retrievàl, and copying fees exceed pre-payment, this office will advise you to seek your authorization before continuing. Should your pre-payment exceed actual Search, retrieval, and copying, you will, of course, be reimbursed.

Given the voluminous nature of your public records request, the time for this office to respond is extended an additional twenty (20) business days as set forth in Rl. Gen. Laws 38-2-3(e). Notwithstanding this extension, the time period for this office to respond to your request is also tolled as ofthe date of this letter pending pre-payment and authorization.

Sadly for me, RI Future doesn’t yet enjoy such access to capital. But if you want to help us get to the bottom of this, please make a donation here. If I’m able to raise the $435, I’ll send Raimondo a check and we can begin the process of getting some answers.

April 7, 2013April 7, 2013

Gina’s Moral Obligation: Wall Street, Not RI

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There is an old saying in politics. “Don’t tell me what your priorities are. Show me your budget, and I will tell you what your priorities are.”

Over the course of her first term as General Treasurer, Gina Raimondo, when pressed to make a choice stand with workers or with Wall Street she will choose her friends from New York over hard working Rhode Islanders. At least thus far.

She was endorsed by working men and women throughout Rhode Island and had an opportunity to work with our public employees to collaboratively put together a plan to strengthen our obligation to the men and women who provide vital services for our state. Raimondo chose a different route.

The treasurer chose to call on her Wall Street friends to fund a front group by the name of Engage RI. They raised nearly $1 million, and proceeded to travel from town to town, city to city pitting RIPTA users vs. public employee retirement security, pitting social service providers vs. public employee retirement security, pitting small business owners against public employee retirement security, and worst of all pitting school children against the very public school teachers who work with children every day.

In the end big business financing, financial manipulation, scare tactics, and pitting one Rhode Islander against another was enough to secure passage of the what has been called “the single most harmful pension reform ever passed in the United States.”

Frozen COLA’s, slashed defined benefits, massive increases in age requirements, and 401k’s with an anemic 1 percent match were just some of the ways Treasurer Raimondo chose to deal with this particular obligation to hard working Rhode Islanders.

Fast forward to 2012, the 38 Studios deal has proved to be a failure and the state is on the hook for over $100 million in the form of a “moral obligation” bond. The dust had yet to settle from media reports and the Governor’s announcement concerning the state’s role in this failed venture there was the treasurer calling for the state to honor its “moral obligation” to the bond holders. She made her opinion known early and often, and continues to assert the state must pay in light of the fact other elected officials, and industry leaders have expressed concern and feel it may not be in the State’s best interest to pay.

As a proud public servant who works side by side with hard working men and women every day it is alarming an elected official in this case the treasurer would put such extraordinary effort into persuading the state to walk away from its “moral obligation” to public employees and teachers.

What is even more alarming is while the treasurer advocated for the state’s “moral obligation” to hard working Rhode Islanders be broken she has consistently asserted her position we cannot under any circumstances walk away from our “moral obligation” to bond holders. I find these two contrasting positions to be especially concerning, and they lead me to question who exactly does our General Treasurer – with gubernatorial aspirations – stand with?

Does she stand with the cashier at the local market, the gas station attendant at the local gas station, the cook at one of our great restaurants; the life guard at one of our beautiful beaches. Does Raimondo stand with the child care provider, the painter, the lobsterman, the nurse and the bus driver?

Or Does the Treasurer stand with the Wall Street insider, the bond holder, and hedge fund partner? Does Treasurer Raimondo stand with John Arnold former ENRON Executive who pumped more than half a million into Engage RI while she pumped her fists to crowds at the State House.

“Don’t tell me what your priorities are. Show me your budget and I will tell you what your priorities are.”

April 4, 2013April 5, 2013

Forbes Trashes Raimondo

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Don’t file this one under Raimondomia as Forbes offers a very harsh criticism of General Treasurer/gubernatorial candidate Gina Raimondo. Ted Siedle writes that Rhode Island’s pension reform, which has attracted many accolades, “will inevitably dramatically increase both risk and fees paid to alternative investment managers, such as hedge funds and private equity firms.”

And those were among the kinder words he had for Raimondo and her pro-Wall Street prescription for pension reform.

There’s no prudent, disciplined investment program at work here—just a blatant Wall Street gorging, while simultaneously pruning state workers’ pension benefits. It’s no surprise that some of Wall Street’s wildest gamblers have backed her so-called pension reform efforts in the state legislature. Former Enron energy trader emerges as a leading advocate for prudent management of state worker pensions? That’s more than a little ironic.

Siedle, who bills himself as “the pension detective,” offers several critiques of how Raimondo is investing Rhode Island’s pension fund, saying her high risk strategy seems designed to benefit the financial industry more than retirees or taxpayers. He also writes, “The pension committed $5 million in 2007 to a Point Judith II venture fund managed by the soon-to-be Treasurer. Someone should take a close look at the merits related to the decision to invest in Point Judith II.”

And he offers particularly harsh criticism of Raimondo’s relationship with Engage Rhode Island:

Any connection, direct or indirect, between the pension and donors to this tax-exempt political organization backing the Treasurer should be investigated, in my opinion. The lack of transparency and regulation related to alternative investments gives rise to almost endless possibilities for abuse and I’ve learned to expect anything.

I thought this was one of his most interesting observations: “‘The cost of public employee benefits in most states and communities is unsustainable,’ says the foundation’s website. Not-so-sure about that; on the other hand, it is well-established that the cost and any short-term outperformance of hedge funds are unsustainable. The cure for unsustainable pensions is unsustainable investing?”

So what does sustainable mean? Is it what taxpayers can afford to spend, or what they want to spend?

April 2, 2013April 2, 2013

2014 Election: More Important Than You Think

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state house november — The State House in November.

When the next gubernatorial inauguration takes place in January 2015, for preceding 30 years, a single Democratic governor will have reigned in Rhode Island for just 4 years and 2 days (barring any unforeseen circumstances leading to a Governor Elizabeth Roberts). Republicans will have ruled for 22 of those years. This is odd for a state that Gallup found to be “the most Democratic state” (tied with Hawaii).

There have been a number of things that could possibly have contributed to this. One is Rhode Island maintains a system of electing its Governor in the midterm election for U.S. President. The lower turnout means slightly fewer voters, and since the larger the turnout, the more the Democratic Party is favored, this pattern assists in electing more non-Democrats. The Party has also been hampered by lackluster gubernatorial candidates, culminating in Frank Caprio’s “shove it” comment in 2010. Finally, The New York Times’ FiveThirtyEight blog suggested that Rhode Island is “the most most elastic state”, meaning it has a large percentage of swing voters.

That FiveThirtyEight post has RIPR’s Scott MacKay positing that voters select Republicans to check the power of the Democrats in the General Assembly. It also quotes URI professor Maureen Moakley suggesting that we may see more independent candidates in the future instead of Republicans, due to the tarnishing of their brand both locally and nationally.

I’m neither a distinguished political observer nor a professor of political science, and it has been a few months since those observations were made, but I’m not in agreement with this (note: I’m not mocking either MacKay or Moakley, just warning you to read my thoughts skeptically). Considering that the Democrats have long held a veto-proof majority in the General Assembly, non-Democratic governors have been an ineffective check. And I do not think Rhode Islanders will be liable to select more independent governors after Lincoln Chafee’s administration ends.

My feeling is that the Democratic Party now has two strong candidates in the wings in Gina Raimondo and Angel Taveras. At any point over the next year, either could join Ernie Almonte in the running. They’d instantly be the favorite. If both run, it becomes harder to parse, with Raimondo having the slight edge over Taveras at this moment in terms of polling and campaign cash reserves. In response to the threat of either of the state’s most popular politicians running as the Democratic nominee, the Republican Party is suggesting Cranston Mayor Allan Fung, Warwick Mayor Scott Avedisian, or former U.S. Congressional District 1 candidate Brendan Doherty.

There’s a plausible path for a Republican candidate in a four-way race, assuming Chafee remains an independent (there’s been discussion of Chafee becoming a Democrat, but I don’t particularly think it’s likely, nor likely to help Chafee electorally) and assuming that the Moderate Party fields a candidate (which will probably be Ken Block).

If Rhode Island manages to vote in a Democratic governor, it may cause more changes than you’d think. The governor has been a relatively weak position for a long time. But it’s been a useful screen for unpopular policies, partly because our governors have been so good at being proponents of unpopular policies. Thus we can talk about the “Carcieri tax cuts” but ignore the very real criticism that they were passed by an overwhelmingly Democratic legislature. Government power is rooted in the General Assembly. That it’s so diffuse and obscured is a notable feature of Rhode Island’s democracy; even within the General Assembly, the obvious power players aren’t always the ones calling the shots.

That might very well change with a Democrat in the governor’s chair. It seems unlikely that either a Governor Raimondo or Taveras will be content to take a back seat to the whims of the General Assembly. If the governor exerts more executive authority, what may take shape in Rhode Island may be more similar to the early days of the American Republic; with a pro-administration faction backing the governor and an anti-administration faction backing legislative power. These forces might very well meet in a constitutional convention (a possibility which shouldn’t be discounted) leading to a major fight over how the government should be structured (though it will likely be manifested in many small changes rather than large sweeping ones).

If the Democratic Party can come through this and figure out an accommodation for a Democratic governor, Democrats might finally secure presumptive control over the governor’s office. This will be boosted if economic conditions improve in Rhode Island during a Democratic administration. But if that happens, there may no longer be cover for the General Assembly.

March 18, 2013March 18, 2013

Who Matters: Bond Traders Or Rhode Islanders?

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Local labor unions are protesting all of Gina Raimondo’s public appearances to call attention to their cuts to their retirement security she shepherded through in 2011. But their appearance in front of the Bond Buyers conference this morning was especially poignant because many think Raimondo represents Wall Street first and foremost, and Rhode Island is the only state in the nation that has a law that puts the financial interest of the bond market over the interest of the state.

So I asked Paul Valletta, of the Providence fire fighters union, Mike Downey, of Council 94, and Governor Chafee what they think of this. (I would have asked Raimondo but she only had time for one question from me – she’s welcome to add her thoughts in the comments below, or we could do a follow up interview.)

December 18, 2012December 18, 2012

Judge to Gina: Negotiate Pension Reform Law

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Gina Raimondo didn’t want to come to the negotiating table voluntarily, but now thanks to a court order she will have to sit down with organized labor and Gov. Linc Chafee to try to hammer out a compromise on Rhode Island’s landmark pension reform law, according to a story first reported by WPRI.

Chafee has already been meeting with union leaders and Raimondo said she didn’t want to join those talks. Judge Sarah Taft-Carter’s ruling today means she has to. Raimondo has said if a court ordered her to negotiate that she would do so in good faith.

NEA-RI Executive Director Bob Walsh, who has been involved in the talks with Chafee, said he thinks a compromise can be worked out by February.

“I expect we will have a busy month of January,” said a very pleased Bob Walsh today. “We’ll have a big group, as we should, because everybody has different issues to bring forward.”

Here’s what I expect labor to be asking the state to budge on behind closed doors this January:

Set a less stringent retirement age, which was unilaterally raised in the reform legislation
Reduce the amount of time the annual cost of living increase to pensions will be suspended
Make the new system less reliant on a 401k-style, or defined contribution, plan

If the parties aren’t able to reach an agreement, a trial could still start as soon as early May.

December 12, 2012December 12, 2012

The EngageRI, Pension Reform, Enron Connection

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Rhode Island has long worried that its oft-lauded efforts to reduce public sector pensions was being secretly funded by Wall Street fat cats. Well, it turns out that one of the biggest financial supporters of pension reform is a former Enron energy trader who went on to make billions as a hedge fund manager.

John Arnold, a 38-year-old Houston man worth more than $3 billion, donated something less than a half million dollars to EngageRI, the shadowy non-profit that paid for much of the advertising pushing for pension cuts, the Wall Street Journal reported yesterday.

“…a key player in the campaign to curtail pension costs in Rhode Island was financed, in large part, by a Houston billionaire who sees the state as an opening salvo in a quest to transform retirement systems nationwide,” according to the WSJ.

In 2009, Fortune Magazine called him “the second-youngest self-made multibillionaire in the U.S. — behind Facebook’s Mark Zuckerberg.”

Arnold, through the non-profit he started to affect pension politics across the country, has given more than $7 million to various efforts nationally, according to the WSJ. He may have funded well more than half of the anti-public sector pension ad campaign in Rhode Island all by himself, according to WPRI’s Ted Nesi, who pick up on the story last night.

According to Fortune article, Arnold and his wife have also “donated $700 million to a family foundation that gives money to charter schools run by an organization called the Kipp Academy, on whose board Arnold serves.”

A spokesman described he and his wife to the WSJ as being an “independent-minded Democrats” and said he has no financial interest in pension reform efforts. But it certainly wouldn’t be the first time he made money on the misfortune of others. Here’s how the Fortune article described him:

Arnold has the brain of an economist, the experience of a veteran gas man, and the iron stomach of a riverboat gambler. Perhaps most notable, though, is his uncanny ability to extract colossal profits from catastrophic circumstances.

He began his career as a wunderkind twentysomething trader at Enron — and escaped that disaster not only with his reputation intact but also with the biggest bonus given to any employee, which he used to seed a new fund.

A few years later he earned $1 billion betting that natural-gas prices would go down just as a reputedly brilliant gas trader at Amaranth made a spectacularly disastrous bet in the opposite direction. More recently, as the commodities bubble burst in 2008, taking even more fund managers with it, Arnold foresaw the looming collapse and once again nearly doubled his money.

December 10, 2012December 11, 2012

Firefighters Plan to Protest All Raimondo Fundraisers

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Paul Valletta, the head of the Cranston fire fighters’ union who is organizing a picket line in front of a Gina Raimondo fundraiser tonight says his members plan to protest every fundraiser Raimondo has until the governor’s race is decided in 2014, he said today.

“When you do something like this to working class people,” Valletta said, “I would hope she would expect this.”

He added, “True Democrats don’t cross picket lines.”

Though, he acknowledged, many will. “I’m sure her millionaire Engage RI donors will cross the line,” he said.

Valletta said this is the first non-House Party-style fundraiser that Raimondo has had that they know about, so it is also the first one they will picket in front of. But he said the treasurer can expect a presence from organized labor at every fundraiser going forward. Like the rest of us, Valletta assumes Raimondo will run for governor in 2014.

He said he expects between 200 and 300 people tonight. Initially it was only supposed to a small group of fire fighters, but he said other union leaders reached out to him after WPRI broke the news earlier this morning.

“It isn’t the money, it’s the way she went about it,” he said. “You haven’t heard one labor person say leave the pensions the way they are. We all said we understand there is a problem let’s come to the table and fix it.”

December 7, 2012December 7, 2012

Pension Reform Goes to Court

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Much will be said, written, ranted, argued, distorted and down-right lied about as Rhode Island’s landmark pension reform law heads to court today. But if there is one thing that everyone from David Boies to Bob Walsh can agree on it’s that the case hinges on whether or not the courts think public employees have a right to the retirement plan that was offered to them.

Here’s how Mike Stanton said it in today’s ProJo: “The pension suits boil down to two critical issues –– do the unions and retirees have an implied contract right, and if so, are the benefits cuts a permissible impairment to achieve a compelling public purpose?”

And for those of you handicapping at home, keep in mind Judge Sarah Taft-Carter has already ruled in a real similar case that they do. Here’s an excerpt from Ted Nesi’s conversation with Boies about just that:

Nesi: Judge Taft-Carter says employees and retirees have an implied contract right to their promised pension benefits. You think she’s wrong.

Boies: Yes. I think there’s a difference between a statute and a contract. But obviously my view doesn’t control; I’m just an advocate for one particular party. What matters is what the courts ultimately decide.

All of a sudden Rhode Island’s landmark pension reform law doesn’t seem like the same slam dunk it did when Raimondomania was bragging about it to the likes of the Manhattan Institute and others.

This is precisely why sitting down and talking it out makes sense. In fact, Dan McGowan calls out the governor not for coming to the table, but for not doing so sooner! McGowan wrote a great overview of the ongoing pension drama under the headline: “Does Rhode Island’s Pension Reform Law Have Any Chance of Survival?”

While the headline may say more about GoLocal than it does pension reform, all the players knew labor leaders thought the bill as written was unconstitutional, and that they could and would put together a couple bucks to fight it in court. Indeed, several of them testified to as much during legislative hearings at the State House.

And now here we are. It may seem like a pivotal day in the process of pension reform but this one – just like the many others that have come before it – is really just another baby step in determining if the government has the legal right to break a promise because it didn’t take the steps necessary to keep it.

December 5, 2012December 5, 2012

Almonte: State Should Negotiate With Labor

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Ernie Almonte – former auditor general, a candidate for governor and a member of the 2011 pension reform panel – told WPRO this morning that the state should be negotiating a settlement to the landmark pension law and subsequent lawsuit with leaders of organized labor.

He said the specifics of the legislation were never debated by the pension panel assembled by Gov. Chafee and General Treasurer Gina Raimondo to spearhead the issue.

“I actually think it’s imprudent not to do that,” he told Tara Granahan and Andrew Gobeil on the WPRO Morning News Show. “The law wasn’t perfect … maybe a negotiation could come up with a better plan.”

Almonte said it’s unwise to put all the state’s chips, if you will, in the hands of the legal system. “It’s so complex and such a big pubic policy issue it’s not a slam dunk. Its probably the equivalent of betting it all on red or black.”

Listen to the full interview on WPRO here.

Almonte said the pension reform panel that he and other stake holders, including four union leaders, participated in did not have a say in the pension reform legislation that was passed in late 2011 and goes to court on Friday.

“I don’t believe there was ever negotiations going on prior to the bill being passes,” Almonte told WPRO this morning. “We were making recommendations, those were not negotiations. They were just talking about suggestion. In the end when the bill that was passed, most of the people on the committee were not involved with that.”

Chafee has opened talks with labor leaders on the landmark pension reform bill, stoking another feud between he and Raimondo. He told WPRI negotiations were a good idea earlier this week and labor leaders Bob Walsh, of the NEA-RI and George Nee, of the AFL_CIO, were seen leaving his office last night.

Meanwhile, the New York Times runs a piece today on the potential conflicts of interest for Judge Sarah Taft Carter, who has family members who get public pensions.

December 4, 2012December 5, 2012

Linc, Gina At Odds Again

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gina linc fung — Gina Raimondo, Linc Chafee and Allan Fung, at an event to launch the campaign to cut pensions in 2011. (Photo by Bob Plain, courtesy of WPRO.)

It’s interesting that both Gov. Linc Chafee and General Treasurer Gina Raimondo will be far flung tomorrow, talking about Rhode Island’s success in slashing public sector pensions.

For one thing, the issue is far from resolved. In fact, the courts only begin to consider the matter this Friday. And if precedent from other states is any indication, the matter of pension reform is still far from resolved.

And for another, Chafee and Raimondo are far from being on the same page on the matter. Shocker, I know.

I got an email from Gina the other day saying the public sector pension system had been “fixed … once and for all.”

Then Tim White reported last night that Chafee wants to work on a compromise with labor as the issue winds its way through the court system.

“In any litigation it’s common practice to have negotiations,” Chafee told WPRI. “I’m in favor of that: of having negotiation as litigation goes forward.”

To recap: as far as Gina is concerned, the issue has been put to bed. Linc, on the other hand, prefers the more proactive approach. And, just in case you were wondering, these two oft-adversaries probably aren’t playing good cop/bad cop with the unions.

Speaker of the House Gordon Fox is so far siding with Raimondo. His spokesperson Larry Berman sent me the same exact statement he gave to WPRI a day earlier.

“I am extremely proud of the process which led to the historic enactment of comprehensive pension reform that I sponsored in the House of Representatives. After months of review, which included 30 hours of open public testimony, we enacted a bill that we believe will withstand the challenge currently pending in our courts.”

Which was one better than what I got from Senate President Teresa Paiva Weed’s spokesperson, who didn’t get back to me.

Providence Mayor Angel Taveras weighed in on the issue, seeming to suggest the state should negotiate while it’s still in the driver’s seat.

“A loss in the litigation will eliminate any leverage that the state has to negotiate,” Taveras told Ian Donnis of RIPR. “And it’s going to require negotiation if you lose, but you’re going to be negotiating without leverage so I think it’s important to be doing it from a position of strength.”

As far as organized labor is concerned, they are pleased Chafee hasn’t closed the door on their interests.

“If the treasurer doesn’t want to talk and the governor does, we’ll sit down with anyone in the executive branch who is willing to sit down,” said Bob Walsh, the executive director of NEA-RI, the state’s largest teachers’ union. “The governor has the right to lead those talks.”

October 4, 2012October 4, 2012

Progress Report: Romney False Appeals to Middle Class; True the Vote Update; Taveras v. Raimondo; Mark Binder

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downtown from providence river — Downtown Providence from the Providence River. (Photo by Bob Plain)

Presidential challengers almost always prevail over the incumbent in the first debate of the campaign, and to that end Mitt Romney and Barack Obama did not buck tradition as they faced off last night. But winning the Wednesday night battle might may come with some strings attached for the Republican candidate.

Despite his empty rhetoric about trickle down government (a meaningless phrase, by the way) Romney continually invoked the ideals of trickle up economics in his attempt to woo voters. The guy who deplores the 47 percent and thinks corporations are people made overtures to the middle class all night long … if you think anything about a Mitt Romney administration would benefit the middle class rather than the 1 percent, I’ve got some swamp land in Florida to sell you, and I’ll bet Dems use this flip-flop to their advantage throughout the rest of the race.

But that’s just one take … here are a slew of others, none so favorable to the president as mine…

The ProJo gets wise to the shady ways of True the Vote, a tea party-started group that is trying to purge voter rolls.

Ted Nesi on how close the polls show Angel Taveras and Gina Raimondo, the odds-on-favorites to be the next governor of Rhode Island: “they’re exactly tied at 57.9% statewide and exactly tied at 59.3% among Democrats. Raimondo’s approval rating among union households is slightly higher than Taveras’s, but Taveras has a bit more room to grow since fewer voters have a negative opinion of him and more don’t know him at all.”

Frequent RI Future contributor Mark Binder has turned to a former friend of his opponent Gordon Fox to run his campaign, according to GoLocal.

“I’m not going to say there’s a racial angle, but I’m not going to rule it out,” said James Vincent, president of the Providence chapter of the NAACP told the ProJo about embattled RIPTA head Charles Odimgbe’s suspension.

Planned Parenthood and local Dems tied Brendan Doherty to the Republican-fuled war against women. He attended a Women for Doherty event at the Westin, while outside liberal activists held a Women Are Watching counter-event.

Call me crazy, but I don’t think the fact that Claus von Bulow was accused of poisoning his wife in a Newport mansion necessarily makes it a more desirable place to own.

In the name of all things sacred in New England, please let Curt Schilling keep his bloody sock.

On this day in 1970, Janis Joplin died way too young … how can you not love a woman who sings with this much soul…

May 24, 2012May 25, 2012

Raimondo Snips at Chafee; Governor Fires Back

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As we predicted yesterday morning, the growing feud between Gov. Chafee and Treasurer Gina Raimondo was indeed Wednesday’s narrative – and after Raimondo stoked the fire by disparaging the governor on the Dan Yorke Show, Chafee fired back later in day.

“She’s free to be critical but she better be factually accurate,” Chafee said at a late afternoon press conference. “On this one she isn’t.”

Raimondo told Yorke that Chafee should have done a better job overseeing the loan made to 38 Studios. “How has the Governor and his staff in his capacity as chair of the EDC board been monitoring this investment? These problems to the extent they exist with this company have been simmering for a number of months and I think at some point tax payers deserve accountability.”

Chafee disagrees with her assessment of the situation.

“This is a really something that occurred in the last few weeks,” he said at the press conference. “I asked industry experts that question: could we have done more and they said no no one at EDC is qualified to say whether a game is going to be successful or not to get involved in the creative aspect of a game.”

The governor went on to say that Raimondo’s energy could be more useful if applied to municipal pension reform.

“I’d really appreciate her help on help with some of these cities and towns issues especially on pensions,” he said. “It’s in her bailiwick.”

It’s still unclear why Raimondo hasn’t helped more with municipal pension reform, but several mayors feel betrayed by her because they have said she promised to help them with their pension reform efforts if they helped her with state pension reform.

It’s also unclear how she knows that 38 Studios has been “simmering for a number of months” as she was very selective in which reporters she would speak with. She went on WPRO and did a sit down with WPRI. But, through a spokesperson, told five journalists waiting outside her office that she didn’t have time to speak with them.

It’s also unclear why she has inserted herself into the 38 Studios debacle. Ted Nesi reports: “Asked last Monday whether Raimondo’s office knew anything about what was happening with the 38 Studios deal, her spokeswoman emphasized that it was an EDC situation and that the treasurer had no involvement.”

May 23, 2012May 23, 2012

RI Progress Report: Raimondo Questions Chafee’s Leadership on 38 Studios Loan

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Narrative of the day: Treasurer Gina Raimondo blamed her former pension reform partner Gov. Linc Chafee for not paying close enough attention to the risky loan guarantee that state made to Curt Schilling and 38 Studios.

She told the Providence Journal, “A company does not run out of money overnight. A company is not a year behind [on] product development overnight. So the question is: how has the state been monitoring this investment; how and what has the governor and his staff, in conjunction with the EDC … how have they been working the deal?”

It’s a legitimate question, but it also shines a bright light on the growing rift between Raimondo and Chafee, who may end up squaring off against each other for the governor’s office in 2014.

Raimondo said she has sought information from the governor’s office and has not yet received a reply … we know the feeling, as RI Future is still waiting to hear back from your staff on a weeks-old request for an interview with you!

Ian Donnis on Anthony Gemma’s positive early season poll numbers against incumbent David Cicilline: “That’s like assuming some guy currently batting .340 is going to maintain his excellence through a grueling a 162-game baseball schedule.”

Look for many to use the 38 Studios debacle as a reason to remake the EDC.

The NAACP, an organization near and dear to state Sen. Harold Metts, has endorsed marriage equality. Last I checked, Sen. Metts is against it.

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