DONALD L. CARCIERI
Party: Republican
Professional experience: CEO, Cookson America; executive vice president, Old Stone Bank; also worked as a high school teacher and in the Catholic Relief Service West Indies Operation
Government experience: Rhode Island governor, 2003 to present
Education: B.A., Brown University, 1965
Family: Wife, Suzanne, and four grown children: Mathew, Alison, Jill and Sarah.
Age: 63
Residence: East Greenwich
PBN: You have positioned yourself as the anti-corruption governor.
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CARCIERI: My approach to these things is, you go after it. … I remember looking at all the compensation and the perks [at Blue Cross & Blue Shield of Rhode Island] and thinking, “This looks like a country club.” … [After our pressure], the chief executive turned over. … [Then] I said to them, “What are you building reserves for?” … If you’re 70 percent of the market or more, what’s going to happen that would destroy your reserves?
I said “Freeze your reserves … and slow down your rate increases, and improve your reimbursements.” And they did that.
PBN: The General Assembly would say, “We fixed Blue Cross.”
CARCIERI: They passed legislation after the fact to eliminate the pay [for board members]. … And what else? They were still getting free medical insurance, and I challenged that. We went to court [and won].
PBN: Let’s talk about Beacon Mutual.
CARCIERI: Beacon was similar and worse. That was a case where, when I came in, you saw many of the same parallels: high compensation of the chief executive … When I met with them and looked at the balance sheet and the income statement … they were sitting on $120 million of profit – they’re supposed to be not-for-profit – and on top of that, they had $200 million of reserves against premiums.
I said, “What are you doing? … Why aren’t you dividending that back to your policyholders [or] cutting premiums?” … When they saw that I was focusing on them … they tried to do an end run, and go to the legislature and have legislation passed to … privatize completely. … I was only focusing on what they were supposed to do, and because of that pressure, they declared a $20 million dividend and they just cut the rates by 16 percent, as a first pass.
PBN: What are your plans for future tax breaks?
CARCIERI: I think looking back, people are going to say this was kind of a watershed year in terms of tax reform in the state, because that flat-tax option, I think, puts us on a path to get close to a par with Massachusetts, which I think is very important for us. … All the other ones that were done – we’re phasing out the capital gains tax; that will be gone next year. The inventory tax … I think it’s got maybe two, three years to run. … The property tax cap, you’ll remember I was in favor of putting that on the ballot; I would have capped the annual increase sooner than what the Senate passed. …
I hear more about the sales tax … we’re at 7 [percent], Massachusetts is at 5. Now, we don’t tax some things that they do. … I think there’s something to be said for nominal parity with Massachusetts. … The other thing I think we’ve got to look at is the estate tax.
PBN: Which should have a higher priority: Cutting the income tax or the property tax?
CARCIERI: The problem with [cutting] the property tax is, what are you going to do? … At the end of the day, the cities and towns have to raise so much money, so it’s only a matter of who pays. If you shift it to the state, then you just shift it to the income tax or the sales tax or some other basis. …
The issue for me in the property tax is, what can you do to slow it down? The notion that you’re going to cut it – you can’t. … So one of the things I’ve been trying to do is figure out, how do you leverage the state’s purchasing power to benefit the cities and towns? And the most obvious one was when we renegotiated the state’s health care contract from Blue Cross to United [HealthCare of New England]. … We saved about $25 million over three years. … Another thing we did was the pension reform; $44 million a year was the savings in total; $18.5 million of that went to the cities and towns.
PBN: Let’s talk about state spending.
CARCIERI: I think the average [growth in the state budget] in the time I’ve been here has been 4 percent a year, which is down from where it was running previously, and this year we were slightly under 4. Would I like it to be lower? Yes. … The strain on the budget is mostly driven by human services; the biggest part of that is Medicaid, and we’re not alone – every state in the country has the same issue with Medicaid.
PBN: You had set a goal of creating 20,000 jobs in your first term, and that’s not going to happen. Why is that?
CARCIERI: Let me ask you a question: If I’d never said 20,000, what would have been the discussion? [A comparison with the Almond administration isn’t fair] because the ’90s was the biggest economic expansion in the nation. … Now, we’re leading [the rest of New England]. I come from a world where you set a goal to get everybody focused … Massachusetts is still below where they were at the end of the recession.
PBN: Are you concerned about [college] affordability?
CARCIERI: That’s [the lieutenant governor’s] talking point. … Our tuitions at our public schools are the cheapest in New England.
When I came in, I really wanted to boost scholarships, because … [my wife and I went] to college on state scholarships, and in 1960 and ’61, we got $1,000. When I got here, the state scholarship program was still giving out $1,000 grants. … One of the first things I did was, there was only $5 million in the fund, so we doubled it to $10 million. We were trying to add another $10 million off Lincoln [Park] and the growth in VLTs … that never flew.
PBN: What if [the casino question] passes?
CARCIERI: I have no idea. It’s going to be a mess, frankly. I wouldn’t be surprised to see – and I won’t do it, but I think others will challenge it legally. … The second piece is, I don’t know how you would negotiate a deal. If I’m Harrah’s, and now the constitutional amendment has passed that says I have a right to build this, what if you can’t agree on the tax rate and this stuff?
PBN: Is there anything we haven’t asked you that you feel business leaders need to know about you?
CARCIERI: I love these commercials that say we have no health plan. We’ve had one for a year, five parts, one of which got through the General Assembly – the whole well-care plan, that should be coming out in the next couple of months – and my hope is that it will cut [premiums] by 30 percent. …
We’re in a position to be one of the first in the country with electronic health records. The Quality Institute started on that … the General Assembly this year provided money. So there’s a lot of things happening that I think will help us in the health care area.
PBN: Anything else?
CARCIERI: I keep saying, the contrast between the two of us is enormous. I’ve spent my whole career generating jobs, building businesses, managing budgets and so forth. … And not that Charlie’s a bad guy – I’m not saying that at all. But he’s never generated a job, never worked outside the building, never managed a budget.
