Frank T. Caprio has been as visible a general treasurer as the state has seen in recent memory, partly because of circumstance – the meltdown in the financial markets – and partly because he says he is looking to increase transparency in state government. He is also considering a run for governor, saying he will make a final decision in three to six months.

He recently spoke with Providence Business News about pension reforms, the future of Twin River, job creation and a new initiative of his department, the Treasury Online Checkbook.

PBN: What was the cost of implementing the so-called Online Checkbook?

CAPRIO: This was in-house. We did not hire IBM and give them a big chunk of money to do it. We worked within the state accounting system and the pay processing system to figure how to get that information into a user-friendly database. Put the right types of descriptions on it, so people can find the thing they are looking for. Now any department of state government, and there’s 45 different departments, can in a plug-and-play fashion do the same thing we did. They are in the same database as we are – it’s the system to pay the bills.

PBN: Have any of the other departments joined your new system?

CAPRIO: I think you will see in the next couple of weeks the Department of Administration, which is a sizable department, electing to do it.

[Editor’s note: The department unveiled it’s new Web site last week.]

PBN: What about the manpower costs for other state departments to jump aboard?

CAPRIO: What they need to do is have their CFO interface with our office and the central state computer people say that they’d like to put their stuff online. And that’s it.

PBN: No fiscal barriers?

CAPRIO: No, because everybody’s on the same system. It’s a matter of saying they want to do it.

PBN: You have suggested that the state consider buying Twin River, which is struggling to pay back its loans. Is that a burden the state can afford with its current fiscal woes?

CAPRIO: The issue is, what other entity in this climate is willing to step up and … take on the level of operational risk that the operator has to take on? The owners of the real estate [BLB Investors] get $100 million out of the machines from the state – that’s their share. But out of that $100 million, they pay their employees and pay other bills, fees and taxes. … and their debt service and principal. That’s the problem: There’s not enough in that $100 million for them to pay the debt service and principal. They bought that facility for $750 million [both purchase price and renovation costs]. Right now, their first loan, chunks of it trade privately between banks. If you use some of the latest trades and you put that across the first loan, that facility is being valued at somewhere between $200 million and $250 million.

It is a difficult purchase for a third party to come in and say that they are going through this whole potential workout situation. What are they going to get at the end of the day? They will own the real estate, but they won’t have any guarantee that they will be granted a license by the state or get over all the hurdles. … The state needs to stand ready that if the place goes down the receivership or bankruptcy path,

in order to protect our share, we may need to step up and take control of the 28 percent share [that goes to BLB Investors], but really

do nothing different than what we’ve done for the last 20 years, which is run the machines. …We need to be proactive and anticipate that people could start doing things that wouldn’t be in our best interest.

PBN: Gov. Donald L. Carcieri has proposed eliminating the 3 percent cost-of-living pension increases for new state retirees. Where do you stand on that?

CAPRIO: The biggest savings that the state budget will see is from a realignment of the cost of living – or guaranteed – 3 percent increase. To put that in perspective, Massachusetts only has a cost-of-living increase on the first $12,000 on a retiree’s pension. We in Rhode Island have a cost-of-living component on 100 percent of the pension, and the retiree has a Social Security component where there’s a cost-of-living increase. It’s not that a state retiree wouldn’t have some cost-of-living increases with their benefits. What we are saying is that the 3 percent for the full value, compounded, is a big driver of the taxpayers’ side of the pensions. …

I agree [with the governor] that we need to make [the pension system] more sustainable. If you are not going to save through changing the COLA, then you need to change other parts of the pension that will result in a savings in what the taxpayers are putting in.

PBN: Where do you see the opportunities for job creation and economic development in the state right now?

CAPRIO: I need to look at the clusters of industries that we have been traditionally strong in, and look to those as the drivers of the economy. Not just focus on one, not time the market or cherry-pick or force some outside industry into our market. ... We need to grow those businesses and keep the ones that are here – the marine industries, fishing, boat building. … Even though we may have lost businesses in those areas, still, when compared to other metro areas, we still have a high concentration of those industries. Then encourage and attract more of those industries because we already have a strong base.

PBN: In terms of growing the existing industries, is the state on the right track now?

CAPRIO: I think we have a fragmented process to attract [businesses]. I would want to see that a little more focused. Every region, city and town has its own economic-development entity. Then you have the state on top of it. I think we could make it a little more user-friendly, both for companies that are here and those coming from the outside.

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INTERVIEW

Frank T. Caprio

POSITION: Rhode Island general treasurer

BACKGROUND: Caprio has been state treasurer since 2007, previously serving as a Providence state senator since 1994. He was a corporate and tax lawyer, working at one point as in-house counsel at Cookson Group plc.

EDUCATION: B.A. in economics, Harvard University, 1988; law degree, Suffolk University, 1991.

FIRST JOB: Caprio was a dishwasher at the Coast Guard House in Narragansett at age 15.

RESIDENCE:

Providence

AGE: 42