Chafee set to exit ‘twilight zone’

SENSE OF ACCOMPLISHMENT: Gov. Lincoln D. Chafee points to the Rocky Point Park deal as one of the hallmarks of his final year in office. / PBN PHOTO/ MICHAEL SALERNO
SENSE OF ACCOMPLISHMENT: Gov. Lincoln D. Chafee points to the Rocky Point Park deal as one of the hallmarks of his final year in office. / PBN PHOTO/ MICHAEL SALERNO

As a candidate, Gov. Lincoln D. Chafee’s opposition to the pending $75 million 38 Studios deal was both a pillar of his platform and symbol of his governing philosophy of fundamentals over special deals and big projects. Looking back on four years in office, Chafee’s warnings about 38 Studios proved correct, but that didn’t prevent the company’s collapse from casting a shadow over much of his term. Even if many of his priorities never made it through the legislature, Chafee argues that history will look back favorably on his record, which includes a pension overhaul, budget stability and no scandals.

PBN: When you announced you would not run for re-election, you said it was because you wanted to put maximum effort into your final year, but at times it’s seemed like a quiet year. What can you point to as accomplishments in this final 12 months that made not running worthwhile?
CHAFEE: From the big things like getting 2014 off to the best start economically in 30 years; and getting the Rocky Point Park deal signed; and Jerimoth Hill for the high pointers that come to the states; and then in the smaller area like the Central Coventry Fire District – which we are taking through bankruptcy and has been going on for two years – those are the things I care about: making government better and fixing things. Certainly the Department of Motor Vehicles is another area I have focused on since I have been in office. One area we are addressing there is, although things are improved, occasionally there are still unacceptably long wait times. So we have negotiated with the union to have part timers at peak times. I believe that is going to be accomplished.

PBN: You mentioned Central Coventry, and since you came into office you have been adamant about helping cities and towns dig out of crisis. Do you think Rhode Island communities have turned the corner or is Central Coventry a sign that there are bigger problems looming?
CHAFEE: Absolutely I think they have. When I came into office they were just reeling. It was just simple math. The Carcieri administration in the downturn had taken a path different from Massachusetts. Gov. Deval Patrick raised the sales tax and made cuts. Here in Rhode Island we didn’t do anything on the revenue side; it was just deep cuts to cities and towns and higher education. So we had some repair work to do when I came in. We not only had to raise some revenue, but also do some repair work for most distressed communities, which are more adversely affected by the cuts. That was something we had to do to get the state back. And … the Massachusetts economy took off. I was criticized when I put in my revenue-generating package, but the evidence is to the contrary. What businesses want to see is that things get fixed. They are willing to take some cod-liver oil, some unpleasant medicine.

PBN: You’ve had trouble getting your policies through the General Assembly. When you look back on it, if you had it to do again, are there things you wish you had done differently, either tactically or strategically, to have more success with the legislature?
CHAFEE: I ask myself that all the time. Especially that first budget, which I thought was bold. We did lower the corporate tax through combined reporting, which was done three years later. We broadened and lowered the sales tax, which steadied our revenue. But to answer what I would do differently, what surprised me is there wasn’t an intellectual debate about this tax structure. It was just knee-jerk reaction. … It was unexpected to me – I thought we would look at what was happening with our neighbors in Massachusetts and we would just fix this. If you have a disagreement, let’s come in and sit at the table and talk about it. But it was this flood of opposition without an alternative and we are still struggling with out-year deficits that I wanted to tackle boldly.

PBN: Maybe you could have started smaller, built up some political capital and then tried bolder structural changes?
CHAFEE: I thought I had the capital with the General Assembly. I recognized I did not have the experience with the House and Senate, coming from local government and then federal government. So I made ex-legislators as directors and thought I was on the right path to good communication.

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PBN: With the Greater Providence Chamber of Commerce opposition, do you think that was at least partly a result of earlier disagreements with the establishment business community over incentives and, specifically, 38 Studios?
CHAFEE: Yes I do. There were probably two things. I had been very apprehensive and vocal during the campaign about doing tax deals, and cited the evidence that one-off deals were not good public policy. You are better off investing in education and infrastructure. And then secondly 38 Studios, my vocal opposition to 38 Studios, which at the time no one knew was going to be a fiasco and the Chamber at the time was in favor of. So that might have contributed to the “Chafee, he’s-not-on-our-side mentality,” which I take exception to. I want to grow the economy as much as anyone in the state.

PBN: So you feel you’ve been paying a kind of double penalty all these years for the mistake of the previous administration in 38 Studios?
CHAFEE: Yes. I call it the twilight zone sometimes. I fought so hard in opposition to doing the deal and the first checks were cut the night before the election in November 2010. So we were in and committed. Then when it didn’t work out, there was never an apology from those advocates. They started to point fingers that I didn’t manage it well enough. And then some of these same people started arguing we shouldn’t make the payments for the moral-obligation bond and criticized me for that. I call it the twilight zone because I’m suffering the slings and arrows from the people who got us into the worst financial decision in Rhode Island’s history. I would have liked an apology, not criticism.

PBN: Now all those years after the deal was struck, do you personally feel you know the entire story of what happened with 38 Studios? Do you still have questions about how this came about?
CHAFEE: Yes. What happened? There was some kind of a Christmas party at Curt Schilling’s house and [Carcieri] yucked it up with an ex-baseball player and said, sure we’ll help you. And then snuck a bill through the General Assembly [that] legislators didn’t know anything about. Then [the R.I. Economic Development Corporation] board full of CEOs and big shots rammed it through. I still have a lot of questions, but my main goal was focusing on getting the taxpayers’ money back through the lawsuit and it possibly could do both. We will learn more about what happened through the lawsuit. We’ve already gotten one settlement and are pursuing full restitution.

PBN: When you talk to someone on the street who says, “Governor, where are the answers?” – You think the lawsuit will get those answers?
CHAFEE: I’m hopeful, especially if it goes to trial. If there is a settlement, we won’t know. I will add that the U.S. attorney and attorney general have looked at this and declined to pursue criminal charges so far.

PBN: So we’re probably looking at an either or: If there is a settlement, we won’t get the full airing this deserves, but we’ll get financial relief. And if there is no settlement, we’ll hear the details, but may come out with no money?
CHAFEE: I’d say that’s accurate.

PBN: The other big issue of your term was pensions, something your successor, Gina Raimondo, was a big part of. When she switches from being treasurer to being governor, do you think she will need to change her approach to the pension lawsuit and negotiating? CHAFEE: Originally she was opposed to entering the settlement discussions, but once we embarked on them she became a full partner to finding a mediated settlement. And that did occur and we came to an agreement with all the heads of the unions that are affected. We got all the memberships except one, the police voted no. I think there is room now to go back, now that the election is over, and rekindle the parameters of that settlement. It is affordable to the taxpayers, good for union members. Perhaps we can get the police onboard.

PBN: Would you sweeten the pot at all?
CHAFEE: It would be very difficult to sweeten it very much. I will add that House Speaker [Nicholas A.] Mattiello has talked about reducing the tax on social security and maybe there is something there that helps retirees and can be tied into a pension settlement.

PBN: Acknowledging all the infrastructure, utility and pre-permitting work that’s happened on the I-195 land, are you disappointed there hasn’t been more progress toward private development?
CHAFEE: Of course I would have liked to have seen massive interest – Apple headquarters east decides to locate in I-195 land – but I know we are on the right path.

PBN: Cambridge Biolabs has proposed a life sciences accelerator on the I-195 land, but said it needs state help with financing. Is that a project worth providing state financial incentives for?
CHAFEE: I’m always open to ideas and know sometimes you have to look at property tax stabilization plans and other things that make sense. But you have to look at the evidence of whether some of these tax deals are good public policy and the evidence is to the contrary. Be open minded, but be careful. Some of the things that have been proven to work and are fair to taxpayers I would be in favor of.

PBN: What are you most proud of?
CHAFEE: My slogan is “trust Chafee” and when the historians look at these four years, they are going to say you could trust Chafee to make good decisions. When you look back, I think I will be vindicated. We proved we can get DMV wait times down, reduced deficits, helped distressed communities get on firm financial footings and dealt with the unexpected: Hurricane Irene, Hurricane Sandy, the blizzard, Ebola, whatever comes our way. And can you name a single scandal in four years? That’s pretty good in Rhode Island. •

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