06/25/13 – House Floor: Budget

062513-housefloor-budget-featured

2:16 p.m.
The House chambers in the General Assembly are hot; the next ten hours or more are likely to be a constant battle to remain hydrated (and sane). So, the question that I have for myself is probably the same question I have for all of Rhode Island: Why am I here?

There are two sides to that question. The first side is procedural: Why should there be a single day in which so much of import reaches the floor for its only real debate? The second side is practical: What are the odds that anything unusual will happen in order to justify the full coverage provided by a dozen journalists from a half-dozen or so news outlets?

Of course, there’s another way to look at the matter and ask: If you care about anything that the state government does (and you really should), why aren’t you here? The price of a large, invasive government is big participation from the public; if you don’t want to be involved, then insist that they shrink the government.

As readers can readily tell from my quick dive into political theory, there’s nothing doing, here. The legislators’ desks are slowly, slowly filling in.

06/25/13 - House Floor

2:50 p.m.
The come-to-the-floor bell has been ringing for a good five minutes, and the room is still mostly empty. An employee from the executive branch just walked through and asked some of the reporters: “The bell is just going off now?”

2:58 p.m.
Bell still ringing. I stepped out for a moment, and the only visible “voice of the people” was a large roll-out sign stenciled with the statement: “No 38 Studios Bailout.” I went to get my camera, but by the time I got back, he’d rolled it up and was preparing to leave.

Funny thing: this state burns through 38 Studios-sized waste, fraud, and abuse in many areas of the budget every year. I guess it takes a single face, phrase, or name to crystallize the problem for the public. And even then…

3:03 p.m.
The bell turned off, but it seems more like an act of mercy than a statement that the session is about to begin.

3:05 p.m.
As we wait, House staff have been handing out the bound copies of the Finance Committee’s recommended budget. That and the printed amendments are the real reason it’s worth coming to this event in person.

The gavel has fallen, and attendance is being taken.

House Speaker Gordon Fox 06/25/13

3:10 p.m.
Representatives are standing to state the legislation they’ll be submitting “on the next legislative day.” They’re piling up a number of brand new bills to enter into debate “pursuant to rule 7d,” which allows legislation after the deadline, provided “the member shall have notified the House of his or her intention to introduce such bill or resolution by reading the title and giving a brief explanation of its purpose.”

3:16 p.m.
Finance Chairman Helio Melo is introducing the budget bill, with a variety of changes that they’ve made since passing it out of committee. They’ve adjusted some revenue numbers up and restored requested funding for a variety of things, including among others new employment positions and a pilot program for state-funded all-day kindergarten.

Finance Chairman Helio Melo

3:18 p.m.
The galleries don’t appear to be very heavily populated. I count three people whom I know to be here in opposition to the Sakonnet River Bridge tolls. I lost my concentration for a moment imagining both galleries full of people with signs speaking out against the tolls, and staying full until the very final vote.

House Gallery, Budget Night

In the meantime, Melo just mentioned that the Finance Committee removed the sunset on the statewide arts district tax break. So, there’s that.

3:23 p.m.
Rep. Frank Ferri has moved article 2 and is introducing an amendment. This is the Medicare exchange for state employees

Representative Frank Ferri

Melo says they’re putting in an amendment to study the Sakonnet River Bridge tolls and to put a hold on them until the study is complete. Some applause throughout the chamber.

So my question about unexpected things has been answered. That’s a pleasant surprise.

3:27 p.m.
I think article 3 (ending divorced employee health care) passed. Article 4 is on the table, to create an alternative program to FICA for part-time state employees.

3:31 p.m.
Minority Leader Brian Newberry is speaking against Article 5, which would remove the requirement that the state put any surpluses in the retirement. He says it’s a slap in the face of working Rhode Islanders, pointing out that this is the General Assembly’s first chance to modify the pension reform, and “we’re doing this”?

Minority Leader Brian Newberry

3:34 p.m.
Rep. Karen MacBeth is pointing out that the pension fund is premised on an investment return of 7.5%, but is getting returns of much less than that.

Representative Karen MacBeth

3:36 p.m.
MacBeth’s amendment is held up in legal counsel (or something), so they’re moving on to Article 6, which deals with license plate issuance and DMV fees.

3:41 p.m.
Article 6 pass. On to Article 7 eliminates the RI Public Telecommunications Authority, transferring its authority to the PBS Foundation.

3:49 p.m.
There’s an Abbot & Costello skit going on about whether article 7 will lead to increased fees related to public access television.

3:52 p.m.
While this debate goes on, I’m following some of the twitter talk about a trade of 38 Studios for a delay of the Sakonnet River Bridge tolls. That strikes me as such a strange tradeoff. So we’re trading not collecting revenue for spending money?

Article 7 passes.

4:02 p.m.
They’re debating article 8, which allows some lease renewals, some of which include significant increases in rates. Rep. Joe Trillo has been asking how per-square-foot prices can be going up when real estate rents have been going down. He alleges somebody making a nice profit from that maneuver.

4:08 p.m.
Rep. Michael Chippendale, who works in real estate, says “now is the perfect time” to be negotiating lower prices, not committing to larger contracts.

Representative Michael Chippendale

Rep. Peter Palumbo says he’s going to vote for the article, but he’s wondering why Corrections needs to rent more space. [Sometimes these debates make one wonder if they’re running out the clock or something.]

4:13 p.m.
Passes with a whopping 16 opposed.

4:14 p.m.
Article 9 is up, having to do with multiple tax-related changes. Here’s the “short” explanation of this article that I wrote for the Center for Freedom & Prosperity:

to bring state income tax law into line with the federal income tax on the expensing of assets in lieu of depreciation; to force Rhode Island businesses to pay state income taxes on the investments in “domestic production” that the federal government allows them to deduct from federal income taxes; to immediately impose the state sales and use tax on “remote” (mainly Internet) sales made into the state and lower the overall rate to 6.5% and remove the tax on high-end clothing; to remove the sales tax on alcoholic beverages from December 2013 to March 2015 and to make up the difference in revenue through increased excise taxes on beverages other than beer and malt liquors collected from the manufacturer/distributor; to renew the hospital licensing fee of 5.35% of net patient services revenue that the state imposes annually on hospitals; to allow the tax administrator to contract with collection agencies to target sources outside of the state; to create penalties for tax preparers for various errors, inaccuracies, and falsehoods; to end a $42 fee that the Department of Labor and Training collects from employers subject to the Hazardous Substances Right to Know Act; to use taxpayer resources to temporarily increase the percentage of video slot terminal income payable to Newport Grand by 3.2 percentage points, ending at the end of June 2015; to change the estate taxes paid in the transfer of farmland to tax the use value of the land, rather than the market sales value; to require that a summons, not a citation, be issued for potential offenses identified by automated traffic violation detection systems; to increase the cap on the state’s tax credit scholarship program (providing tax incentive to donate to private school tuition) from $1 million to $1.5 million; to exempt the sales of all original works of art from the state sales tax, essentially making the entire state an “arts district”

4:22 p.m.
There’s some debate going on about striking particular parts of the budget, specifically the domestic production deduction. A move to amend, from Rep. Antonio Giarrusso was ruled out of order because there’s no written amendment to make up for the money elsewhere. That means the only option, at this point, is to vote the whole article down and force it back into committee, I guess.

When you sit back and look at the number of ways in which the system is constructed to move control to the back rooms, it’s quite breathtaking.

4:28 p.m.
House pages are handing out the delicious-looking chocolate-chip-cookie ice cream sandwiches to the members. That may be the cause of the increased noise level of jubilation that required Speaker Fox to bank the gavel for order.

4:31 p.m.
This budget article alone could (and should) be a full week of debate and amendment.

4:34 p.m.
Rep. Patricia Morgan asks why the state is offering Newport Grand a bailout when the City of Newport hasn’t offered up anything. Rep. Jared Nunes says he has a hard time giving money to a private business when his town of West Warwick is hovering on the verge of insolvency.

Representative Jared Nunes

4:37 p.m.
Rep. Chippendale acknowledges that there are a lot of complicated parts of this article that might require members to hold their noses, but he says it’s “a good article.” His judgment appears mainly to be made based on changes in the estimated value of farmland, which he supports.

That’s legislation, I suppose… a little something for you, a little something for me. That’s how you get East Bay legislators voting for budgets that include tolls (in the first place) and that delay the tolls but bail out video-game speculators the next year.

4:40 p.m.
Rep. Charlene Lima asks to vote the article in sections, because she’s worried that Newport Grand is looking for some extra money because its owners are currently looking to sell.

4:43 p.m.
Another Abbot & Costello moment as Rep. James McLaughlin says the House should vote separately on the articles, and Rep. Melo assured him that the House would do so (unlike the Senate, which votes the whole budget once). I think McLaughlin meant the sections of this article, though.

4:49 p.m.
Rep. Fox allows a separate vote on Newport Grand (I think; he’s referencing line numbers). It passes. The article as a whole passes, with a small opposition.

Moving to Article 11.

4:51 p.m.
Article 11 is an incentive program to encourage municipalities to pay into their pension funds.

4:57 p.m.
Rep. Lisa Tomasso has been arguing for an amendment to require municipalities to prove compliance before receiving the aid. Rep. Melo said the control is that the General Assembly might not continue the program if municipalities aren’t following through on their end of the bargain.

Amendment fails.

On the article, Rep. Morgan says she won’t be voting for this article because the General Assembly cut the governor’s original number in half. “But I’ll spare you my amendment.” (And well she might, because amendments are pre-doomed to failure.)

5:03 p.m.
Article passes. On to article 12. Hospital payments.

5:05 p.m.
Article passes. I’m noticing that Representatives Costa and Newberry are standing as lone protest votes on many of these tallies.

5:08 p.m.
13 passes. On to 14. This one makes some changes to the way the state’s employers will pay back federal debt on unemployment. Passes.

5:09 p.m.
Article 15. More spending on jobs programs. Here’s my description:

to force state taxpayers to subsidize businesses’ hiring and apprenticeship programs through a state Work Immersion Program that would pay for half of an employee’s first 200 hours of work, increased to 75% if the employer hires the person; to use public money to organize and maintain an on-the-job training program called “Back to Work Rhode Island”; to expand the state’s low-income child care program to provide subsidies to families participating in some sort of job training program; to require the Department of Labor and Training to upgrade its online employment services, with tools to identify the gaps between participating candidates’ skills and participating employers’ needs

Passes, naturally. Two (guess who) opposed.

5:11 p.m.
They’re zipping along. Article 16 just passed without any opposition whatsoever. That’s the one that creates a slush fund for the state judiciary. No debate on that? Really? How many legislators even noticed it?

5:16 p.m.
Articles 17 and 18 have passed, but I’m still hung up on 16. In the budget summary book that the House staff handed out, most of the articles break out the sections separately:

Article 16 does not and, indeed, does not offer any clues at the new judiciary fund, outside of regular funding processes:

The description also conspicuously leaves that fund (the vaguely named “Third Party Grants” fund) off a list of various restricted receipt accounts included.

No debate?

5:26 p.m.
There’s actually some debate going on, now, over an amendment from Patricia Morgan to require the health benefits exchange to offer plans that don’t include abortion.

Finance Chairman Melo is arguing: “This is the budget, it is not the vehicle to have this discussion.” He says the exchange does “not even have rules and regulations, yet,” and the money is all federal, and just to set up the exchange. “We haven’t even set up programs, yet. We will have the opportunity to voice our opinions about what programs should be available when that time comes.”

5:33 p.m.
Fox finds the amendment not germane and throws it out. He really doesn’t want to be seen as favoring one side over the other (he claims); he says it was a close decision, but because there aren’t even plans in place, yet, he’s inclined to rule exactly in line with the side that (presumably) he personally supports.

Morgan objected, saying that they will be moving people from RIte Care into the exchange, making her amendment relevant. The chamber voted overwhelmingly to uphold Fox’s ruling.

[It seems to me that it would actually be preferable to tell the regulators and plan-arrangers what the legislature’s wishes would turn out to be before they go through all the work.]

5:50 p.m.
Big shouting match between Rep. Joe Trillo and Speaker Fox. Trillo was trying to get the amount of savings from shifting RIte Care members into the health benefits exchange and objected to everybody else giving him “context” and so on.

Fox interceded, and said, “I’m letting you characterize what everybody’s saying.”

Trillo shouted, “You’re letting me? Well, thank you very much!”

Representative Joe Trillo

Fox slammed his gavel several times. “Don’t you shout down me!”

5:54 p.m.
After some consultation with Speaker Fox, Melo rises with the answer for Trillo.

Speaker Gordon Fox and Chairman Helio Melo

The state now spends $599 million on the program and will spend $593 million, with half of each amount being federal dollars.

5:59 p.m.
Discussion continues… more calmly.

6:04 p.m.
Article 19 has passed. Now we’re on #20, the roads and bridges revolving fund.

6:13 p.m.
Now they’ve slowed down the pace to make a spate of requests to be “recorded in the affirmative” for votes that they missed earlier.

Fox says he’s “lost his place.” The room corrected him that they’ve already voted on the article currently on the board, which is 21.

6:20 p.m.
Debate ongoing about the historic renovation tax credit program. There’s a new amendment to the article that would remove the $12 million cap on the total program. However, Melo assures Trillo that there is only the remaining $34 or $36 million available in the program. [Unless they appropriate more, à la 38 Studios.]

Melo is now explaining to Newberry that the $12 million cap was initially intended to stretch out the remaining money for three years, but now they want to try to get all of the credits out into the market more quickly. To give out all of the credits, there would actually have to be something like $125 million in new projects, which would be “a good problem.”

6:29 p.m.
In response to concerns that the tax credit program could become like a 38 Studios kind of thing, Melo says most of these projects actually use the credits that they receive and don’t sell them. But there’s nothing to prevent their doing so.

Finance Chairman Helio Melo

Majority Leader Nicholas Mattiello makes the reasonable point that tax credits aren’t like bonds or debt backing, because once the credit is issued, it’s issued. It can’t come back any higher.

But Rep. Patrick O’Neill points out that the initial legislation for this had a cap at $30 million. This would remove any caps at all. “Something’s not right, here, ladies and gentlemen.”

Upon questioning from Rep. Spencer Dickinson Melo acknowledges that the $34-36 million is actually an authorization for the EDC to issue bonds to cover the tax credits, which will have to be put into the budget at some point in the future.

6:44 p.m.
Another advantage of actually being here: it’s instructive to watch, whenever a member of leadership is facing tough questions, to see a series of well-dressed staffers crawl along the floor and whisper answers from below all of the camera shots.

6:52 p.m.
Ah, the plot thickens. Rep. MacBeth has offered an amendment to prevent tax credit recipients from transferring the credits to other parties.

Rep. O’Grady said that it would kill the program, because companies need to sell the credits to get the money for their projects. But… that contradicts what Rep. Melo said earlier about most projects’ using all of their credits themselves… as MacBeth is now pointing out.

Now Melo says the credits are not issued until the projects are complete.

Finance Chairman Helio Melo

6:57 p.m.
And now O’Grady says that companies need to be able to tell people that they will be receiving credits, which Rep. Linda Dill Finn subsequently says

O’Grady mentions “other stakeholders” with whom he’s been working.

Dickinson is raising questions about the premium that a lawyer charges to handle the transfer. O’Grady says it’s currently about 25%.

Dickinson: “Government is doing something that banks have decided not to do.” He’s pointing out that the project will only get 3/4 of the money given, with the state required to pay interest (at who knows what rate) on the money borrowed to cover it.

Dickinson: “The people that are getting the money here may not be the masons and the backhoe operators who we want to put back to work. The more I hear about this, the more I think it is not what we should do.”

7:05 p.m.
Fox appears very annoyed that representatives are asking questions about parts of the legislation outside of the amendment, because they aren’t familiar with them. “We’re defeating the purpose of posting the budget for seven days.”

O’Grady is saying that the problem with just giving money to contractors would incur federal capital gains taxes over 30%.

Apparently, there’s an alternative mechanism that allows the project to bring in a mission-related non-profit (he mentions RI Foundation and GrowSmart Rhode Island). That non-profit would get the money without being taxed, take a promise of 5% profit (ostensibly for its risks, pending completion of the project), and put the rest back into the project.

7:17 p.m.
Rep. Nunes is arguing against the requirement for apprenticeship programs as a gimme to the unions, because the apprenticeship board can take years to approve programs.

“Do you want to go to your constituents and say that you helped create jobs, or do you want to go back to your union constituents and say, ‘I got you a job.'” “We’ve got a great article here, and we’re screwing it up!”

7:23 p.m.
Morgan is speaking poetry on the artistry of stone masons who don’t need apprenticeship programs, because they pass their craft down.

Representative Patricia Morgan

7:38 p.m.
Rep. Morgan is pointing out that it costs more than a $125 fee to start an apprenticeship program… because you actually have to hire apprentices.

7:40 p.m.
Rep. Trillo says Nunes is an expert in this field, but the reps aren’t going to listen to him, they’re going to listen to somebody who doesn’t have “a clue what he’s talking about.”

Trillo: “We like to think we’re here for the average person, but we’re not. We’re going to ram it, slam it, and jam it through. That’s what we’re going to do. So let’s do it.”

7:44 p.m.
Dickinson makes the case for handouts for unions, saying they think to the future, vis-à-vis apprenticeship programs (also future union members and dues). [Interesting that he worries about erosion to financiers, but not to unions.]

Rep. Antonio Giarrusso says this is unquestionably a union sop. He sat in a committee last night on a similar apprenticeship program, and everybody who argued against the program was non-union and everybody arguing for it was union.

Amendment fails… all of 20 supporters.

7:48 p.m.
Another amendment from Morgan would raise the threshold of company size above which companies would have to have apprenticeship programs from 5 employees to 50 employees and require that 40% of employees in those larger companies would have to be either minorities (which in RI includes Portuguese, I believe) or veterans.

7:50 p.m.
Nunes makes the point that a 5-person threshold creates incentive for companies to stay small and “below the radar,” so they can never get big enough to compete with the union shops… not the least in sending people to advocate for their interests at the State House.

7:52 p.m.
Chippendale impassioned about “the consciences” of the people who would vote down this amendment.

Representative Joseph Almeida passionate about minorities: “We count when it’s time to collect votes. We count when it’s time to collect taxes. But we don’t count” when it comes to programs from the General Assembly and job advancement.

Almeida had to as Speaker Fox to ask for quiet, because there’s a cadre of representatives in the back of the room and outside making a lot of noise.

Gabbing Representatives

7:58 p.m.
Sheesh. Camcorder hard drive is full. I was going to empty it during the break, but we’re at 8:00 without dinner.

8:02 p.m.
Rep. Mattiello argues that no companies will be able to apply for the program if they are required to have 40% minority+veteran workforces.

8:04 p.m.
[But looking at the amendment, the 40% rule would only apply to companies required to have an apprenticeship program, which means (by the amendment) it would have to have 50 employees in the first place. So Mattiello’s argument really doesn’t apply. At most, the amendment would only limit the projects to small-to-midsized companies.

But the amendment went down with (a record) 24 votes against the leadership position.]

8:11 p.m.
An amendment from Trillo (eliciting groans from a senior press corps member) would require any tax credits over $1 million to come before the General Assembly for approval.

8:14 p.m.
Mattiello said the GA will be on break soon, so projects over $1 million couldn’t get going. Newberry replied:

1) “Inefficiency in government is a good thing” because overly efficient government does suspicious things.
2) They can come back at any time.

8:18 p.m.
Tangential to answering a question from Rep. Baldelli-Hunt, Rep. O’Grady says that requiring GA approval would be a boon to lobbyists.

8:21 p.m.
Trillo: “At this point, I want to second-guess everybody. I don’t have any faith at all in the EDC.”

8:26 p.m.
And everything passes as planned. Break time.

9:14 p.m.
Still waiting. Just a few representatives coming in.

It was the story of my life during the break: To kill time, I played the piano in the rotunda for a 1/2 hour. After me, an intern from the governor’s communications office took a turn, and that’s when Brian Crandall showed up with a TV camera. [Note: here’s the clip.]

9:42 p.m.
And there’s the bell to gather… finally. Word is that the RIDOT is scrambling to warn the General Assembly that federal law will prevent them from putting tolls on the Sakonnet River Bridge ever if they don’t do it now. Combined with whispers I’m hearing on the floor, it actually could be an interesting night (or early morning, as the case probably will be).

9:57 p.m.
Bell still ringing.

10:03 p.m.
Article 23 has come and gone (taxpayer subsidized business handouts).

10:05 p.m.
Surprise amendment from Melo to delete article 24 altogether, relating to a manufacturing job credit program. Asked about the fiscal impact, Melo said the article was revenue neutral (which makes me wonder why it was in the budget in the first place). Must be interesting trades going on. Who would have wanted that killed, I wonder.

For the parliamentary procedure nerds out there (I know there are at least two other than me), I just caught some whispered debate between Mattiello and Melo on whether the article required a vote after the amendment passed, even though the amendment deleted the article. Melo said “no,” and they’ve moved on, but I think a stickler for the rules would insist that the vote be taken.

10:13 p.m.
Melo is now trying again to sell article 5, which stops putting surplus money into the pension fund. He talked about its having no effect on the recommended contribution (ARC) payments, which seems irrelevant to me. He also talked about how the revenue conference left the budget with a hole.

That’s odd, though, because the budget was originally passed with something like $75 million less, that being the surplus projected at the autumn revenue conference. As far as I can tell, the fact that the May revenue conference reduced that projected surplus by $50 million (or something thereabouts) doesn’t change the fact that this year’s budget still has a surplus.

10:19 p.m.
Rep. Doreen Costa proposes an amendment to use the 38 Studios payback money to cover a pension payment. Amendment falls.

10:21 p.m.
Rep. Scott Guthrie makes the obvious point that this article doesn’t just not make the payment this year; it removes the surplus-to-pension payments forever.

10:25 p.m.
Rep. Guthrie is saying that he’s going to have to vote against this budget because it takes this money away from the pension fund, “undoing” the reforms that have been implemented.

10:26 p.m.
Rep. Larry Valencia says that if 38 Studios is a “moral obligation” so is this. He suggests a 1/2-percent or so on high-earner income tax. “A quarter of a Cimini,” as he calls it.

Representative Larry Valencia

Now Trillo is asking what the unfunded liability is, guessing around $500 million. If only! A tweet from Ted Nesi puts the number at $4+ billion. I’d tack on $2 billion or so in that “+.”

10:33 p.m.
Chippendale is arguing that the reason Rhode Island is in its “constant doldrums” is that we never stick to a plan.

10:36 p.m.
There’s a pattern going on this evening: People speak against the article or for the amendment; leadership defends or opposes; nobody else talks; votes are still massively lopsided.

10:38 p.m.
Rep. Lisa Tomasso says that, when she voted for pension reform, she felt like she was “betraying the people with whom I entrust my children” (meaning teachers in the pension system). The representatives, she says, blamed the problems on the people who came before them. “This is our moment to be those people that came before us.”

10:42 p.m.
Mattiello asks to hold the article for now and move on. Votes still not there? I think I heard him say to Rep. Melo, as he walked by me, something about amending the article.

My suspicion is that the House leadership read my earlier comment about there being no reason to attend these debates and wanted to prove me wrong.

10:46 p.m.
Now article 25, which repeals the infamous 38 Studios loan guarantee program in its entirety. Passes.

10:48 p.m.
Article 10 is up, to revise the 2013 budget. MacBeth asks if there’s anything in this article that relates to article 5, and Melo says no.

(I don’t know how that could possibly be the case, since there would have to be a surplus for article 5 to go into effect, and there won’t be a surplus if article 10 changes the budget.)

10:53 p.m.
They’re now at ease as they wait for a new amendment, perhaps (I’m hearing) to make article 5 a one-year-only change of the pension reform, to get it over the hump.

11:12 p.m.
Article 5 is back on the floor. Melo introduces an amendment that stops the repeal of the surplus-to-pension law and just exempts fiscal year 2012. Wasn’t it fiscal year 2013 that was at issue?

Guthrie: “Some of you freshmen are learning how things work down here. Some of you have been asked to take a walk.”

“This is wrong; it’s illegal. This amendment should fail; this article should fail; the entire budget should fail.”

11:16 p.m.
Melo puts the pension fund’s unfunded liability at $1.8 billion. Not sure where that came from.

11:20 p.m.
The amendment passed, but I’m stuck on the fiscal year question. This is confusing. They’re talking about $12.9 million, which is what the budget document cites as the depreciation of the 2012 surplus of an actual surplus of $135.9 million, with a “free surplus” of $115.2 million.

I don’t get it, frankly.

11:36 p.m.
Here’s as far as I’ve gotten: The law that this article would change requires the money to be moved after an audit of the fiscal year has been completed, so presumably the $12.9 million was what they settled on in December or whenever the audit was complete, just the executive branch chose to ignore it and spend the money.

House Whip Stephen Ucci calls the debate “political football.” “We don’t have the money.” He says $13 million won’t affect the pension fund in any meaningful way.

[Next day note: a source inside the administration explains to me that much of the surplus is required to go into a cash-surplus, rainy-day fund, and the $12.9 million was what was left above that. Had some hospitals made their licensing fee payments on time, it actually would have been more like $23 million. It’s surprising, I’m told, that the Pension Board didn’t move to sue Governor Chafee for failing to transfer the $12.9 million immediately, as required by law.]

11:42 p.m.
Rep. Newberry said that there’s really no reason they can’t put this article aside and find the $12.9 million tomorrow in House Finance. “It won’t be convenient,” he said, but they could do it.

11:44 p.m.
Rep. Charlene Lima suggests that people won’t trust the General Assembly, because it’ll never keep its word. (There are people who don’t realize that you have to keep an annual eye on this place?)

11:46 p.m.
Rep. John Carnevale said that the General Assembly can’t just change the law to suit its needs, otherwise they could change the law to make things like embezzlement legal.

11:47 p.m.
Article fails! 39 to 36.

House Speaker Gordon Fox

11:50 p.m.
New articles are now in order. Tomasso had one relating to moral obligation bonds, and it went down.

Now Lima is proposing one not to pay back 38 Studios bond holders.

11:55 p.m.
Rep. Michael Marcello says no state has ever not paid back a bonded debt and says not doing so will kill the state’s bond ratings, moral obligation and otherwise.

11:58 p.m.
Trillo: “That was a bunch of snake oil; you’re a good salesman, though.”

“I hope all of you who support this and vote for it are paid back at the ballot box.”

12:04 a.m.
An unhappy-looking Gordon Fox is wandering the floor shaking his head.

12:06 a.m.
Rep. O’Grady says he wasn’t here to vote for 38 Studios, but he’s here to clean it up.

Rep. Chippendale says the state didn’t vote for the debt; the EDC did. That’s what it means that there’s no full faith and credit in this. “Stop referring to this as defaulting.”

12:09 a.m.
Chippendale gave a passionate history lesson about moral obligation bonds, saying they were invented by a Republican politician to go around the process for bonds. “There’s nothing moral about that. It’s wrong.”

12:13 a.m.
While debate goes on, I can’t help but wonder how a $13 million budget item in an $8 billion budget has leadership looking like the state’s about to collapse.

Majority Leader Nicholas Mattiello, Majority Whip Stephen Ucci, and House Speaker Gordon Fox

Back to the debate with Newberry: “We should not be debating this at midnight while half the chamber’s being taken out back to be asked if they’ll reconsider their vote on the last budget article.”

12:17 a.m.
O’Neill says he’s lost sleep over the infamous 38 Studio vote. He wonders how the bond raters will react to a budget that spends $50 million to study whether to default.

Interesting mixed metaphor from O’Neill: “This is not half-pregnant time; this is Waterloo.”

12:21 a.m.
For the record, as a taxpayer, I think downgraded credit ratings are a plus, not a problem.

12:26 p.m.
Rep. Kenneth Marshall said that this issue is dividing the House. “It makes us weaker. We’re better than this.”

Rep. Chippendale stood to say that debate is the “lifeblood” of a legislature.

12:31 p.m.
Dickinson: “You want to scare Moody’s? Tell them we’re not doing anymore bonds!”

He (finally) brings up the 7.5% interest rate. “These investors were betting on toys.” (That was the scheme, wasn’t it? To get high-risk yields with an expectation of low risk.)

“I’m from New Jersey, and I don’t scare easily. I’m in the mood to do what my constituents want… there’s a new sheriff in town.”

12:37 p.m.
Marcello appears to have been irked by Trillo’s snake-oil salesman comment.

12:41 p.m.
Marcello: “I’m sorry that this thing didn’t work out, but…” Now he’s threatening that the insurance companies and bondholders will come back for the money with fees.

[You know, it seems to me that too much weigh is put on the bond rating agencies’ threats. If they decide to hurt RI’s general obligation bonds as punishment, that may drive up interest a little bit, but smart investors will still know that the risk on those bonds hasn’t really changed, so they’ll buck the bond rating agencies at a price lower than might be expected.

But the more important point is that bond ratings are supposed to be sober estimates, not political arm twisting. They’ll lose their scary powers over everybody once investors realize they’re not measuring what they’re supposed to measure.]

12:47 p.m.
MacBeth says she spoke with a company that bought the bonds, and they told her they did so because they saw an opportunity for high yield with no risk.

12:52 p.m.
Shouting Trillo: “We never voted for 38 Studios. Would you please stop saying that?”

Trillo: Anybody who ran for office saying that the incumbent voted for 38 Studios: “You lied!”

12:54 p.m.
Dickinson defines the word “propaganda,” saying “moral obligation” is not defined anywhere in the law.

1:10 p.m.
Rep. Tomasso says not paying off the bonds would “rock Wall Street’s world.”

1:13 p.m.
Rep. Teresa Tanzi recasts this $2.4 million as the only way to preserve the state’s right to have lawsuits on 38 Studios and other things. (Not sure why the state couldn’t revisit finding the money when it actually has to be paid, do or die, next May.)

1:19 p.m.
MacBeth takes on the idea that it’s different not to pay for reason of having no money and not to pay for reason of not wanting to do so: based on statements made earlier that the state doesn’t have the money to fund its other obligations.

1:25 p.m.
One would think responsible government would say, “Hey, we’re getting off the tracks, here. Let’s go get some sleep and take this up tomorrow afternoon.”

1:27 p.m.
After all that, the amendment goes down. And they’re recessing until tomorrow at 2:00 p.m.

MacBeth asks to reconsider article 5 now, rather than just wait until tomorrow (i.e., today) to do it.

First, Fox said she didn’t have a second for her motion. When one materialized, he just refused to let it happen, mumbling: “There’s nothing to prevent us from reconsidering this tomorrow.”

Looks like leadership gets 12 hours to muscle its people.



  • _Andrew_

    Re: 3:10 Rule 12(i) says that committees are only supposed to be able to act on 3 bills in total submitted after the April deadline — provided requests for hearings are submitted by April; the 7(d) exception is supposed to open up a window for "late" bills to be submitted between February and April. http://webserver.rilin.state.ri.us/BillText13/Hou

    I guess updating the time limits each year, even though they are a dead letter, at least gives the rules committee something to do.

  • _Andrew_

    Re 4:37 p.m: Were they really video game speculators, or did they know they were investing in the state's ability to tax all along?

  • _Andrew_

    Re: 5:05 p.m: I believe Rep. Newberry has stated in the past that if plans to vote against the entire budget, he also votes against the individual articles.

  • MoniqueAR

    "They’re debating article 8, which allows some lease renewals, some of which include significant increases in rates."

    And that is one of the bigger areas of government waste … er, gravy. Tailor those lease requirements for your chosen landlord.

  • MoniqueAR

    "Article 16 just passed without any opposition whatsoever. That’s the one that creates a slush fund for the state judiciary. No debate on that? Really?"

    Sheesh. That one has the stench of another 38 Studios, didn't- know-nothing vote that will undoubtedly come around to bite the state in some way; i.e., retrospective questions like "how could you pass the law that has led to the legal bribing of our judiciary?"

  • MoniqueAR

    "Melo is now explaining to Newberry that the $12 million cap was initially intended to stretch out the remaining money for three years, but now they want to try to get all of the credits out into the market more quickly."

    Major alarm bells!!! Superman "38 Studios" Building straight ahead!

  • RITaxpayer

    Trillo: “We’re not here for the average person, but we’re not. We’re going to ram it, slam it, and jam it through. That’s what we’re going to do. So let’s do it.”

    I understand Trillos frustration but, if that's going to be his attitude maybe it's time for him to step down.

  • MoniqueAR

    "Word is that the RIDOT is scrambling to warn the General Assembly that federal law will prevent them from putting tolls on the Sakonnet River Bridge ever if they don’t do it now."

    That sounds highly suspect and unlikely.

  • RITaxpayer

    Wonderful coverage and commentary. Thanks Justin.

  • Kevin

    Terrific work. Please keep it up.

  • MoniqueAR

    Wow!!! Very unusual budget outcome.

    (Ditto RITaxpayer.)

  • lblais

    Great blogging, Justin. OSTPA/RI Taxpayers was on the House floor prior to start of session , in the gallery and the hall where it was somewhat cooler!

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