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1

Funding Cronies in the Company State

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Aw, well, isn’t this a nice “things we choose to do together” government report?

Gov. Gina Raimondo and other state officials unveiled Skills for Rhode Island’s Future at a Bank of America call center in East Providence, which is hiring some new workers through the program.

That’s what people will take away, but what they should focus on is the background story that’s somewhat visible in the details:

  • The federal government gave Rhode Island $1.25 million to hire the private non-profit Skills for America’s Future.
  • This is the corporation’s second location, expanding from Skills for Chicagoland’s Future.
  • The founder of the organization, Penny Pritzker, went on to become Obama’s secretary of commerce.

The group’s IRS filings fill in the picture a bit. Between 2012 and 2014, its total revenue ranged from $3,316,498 to $3,943,121, with the better part coming from government.  If the linked article above is correct that it has “found jobs for more than 3,100 people in Chicago,” the per-job cost is over $4,000.

I’ve written frequently about the idea of a “company state” model under which government becomes the central industry for an area (like the State of Rhode Island) and strives to expand the services that it can provide in order to justify confiscating money from disfavored groups in the area or in other states.  Skills for Rhode Island’s Future is a great example.

With the federal government as its anchor client, the organization is expanding across the country like a franchise, spending copious amounts of money to make people feel dependent on government, acting as a recruiting contractor for connected companies and acting as an entry point for people’s reliance on government.

According to the office of Governor Raimondo, Skills for Rhode Island’s Future will not be interacting with state welfare offices or be plugged into the Unified Health Infrastructure Project (UHIP) system, which would direct clients to any and all other government services for which they might qualify.  That would be a relatively short step, though, once the organization is established.

As this system becomes entrenched and integrated, companies will have increasing incentive to play ball and get in on the scheme, while workers will have incentive to become the sorts of people whom the government and the corporations want them to be. Thus will more people be drawn through the dependency portal, leaving fewer who aren’t under the direct influence of and subject to reliance on government.

2

National Popular Vote and the Company State

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Yesterday, Dan Yorke had Providence College Political Science Professor Joseph Cammarano on his 630AM/99.7FM WPRO show, discussing a variety of topics.  When I first tuned in, a caller was growing angry that the professor wouldn’t say for whom he intended to vote, and over the next hour or so of sporadic listening, I came to see how Cammarano might have inspired that response.  His bias came through, most notably in his drive for equivalence with Republicans whenever a caller brought up Democrats’ malfeasance.

One question that came out of nowhere was the professor’s opinion of the electoral college, and he clearly supports the efforts of states, including Rhode Island, to work around the Constitution with the national-popular vote movement.  In not so many words, he that it makes no sense — given our increasingly national culture — to have a system in which we think of states as states, regardless of their population.  That is, he thinks it’s obvious that states don’t have an equal standing of themselves, as political entities, necessitating that the votes of people in low-population states are weighted to give them greater balance against the national votes of people in high-population states.

When this topic came up a few years ago, I mainly thought of it in terms of politics and the calculation for Rhode Island.  After all, Democrats tend to do better in urban areas, so the General Assembly’s signing on to the national popular vote compact was a partisan act, not a representative one (as in advocating for the people whom one actually represents).  The reason Rhode Island gets no attention in national politics isn’t that we’re small; it’s that we’re one-sided.  Republicans have no chance, and Democrats don’t have to work for our electoral votes.  But the reality is that the national popular vote scheme would cut Rhode Islanders’ electoral sway in half.  Why would our representatives agree to do that?

Cammarano’s short statement was the first time I’ve considered this question since stumbling upon the idea of the “company state.”  I’ve been noting that certain cities and the whole state of Rhode Island are moving toward a civic business model in which government becomes the major industry, with incentive to import or create new clients for its services as justification for taking money away from other people in order to finance them.  As Rhode Island has long been learning, the flaw in this model is that the payers can simply leave, and the state is under constant risk that, due to recession or otherwise, people in other states will push back on the federal government’s subsidization of the scheme.

The electoral college, in other words, is one protection against having this “company state” model become truly national, such that municipal and state governments that rely on the compulsory transfer of wealth will be able to reach any wealth from sea to shining sea.

4

Rhode Island Has Less and Less Company with Its Estate Tax

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Rachel Sheedy reports for Kiplinger that the state-level estate tax continues to evaporate from the United States of America:

Delaware is one of the latest states to bury its estate tax, which snared estates exceeding $5.49 million last year but has completely disappeared. New Jersey, too, has ditched its estate tax altogether, after hiking its exemption to $2 million in 2017 from its notoriously low, longtime exemption of $675,000.

That leaves 12 states (plus the District of Columbia) with state estate taxes on the books. And many of them are hiking exemptions for 2018, sparing more families from a tax bill when a loved one pass

So, the question on the table has become:  Will Rhode Island be the last state to slough off this relic of political philosophy that stands in the way of Americans who wish to improve their families’ lot and keep wealth churning throughout society?

5

Rhode Island “Company of the Year” (and State Ward) Already Has a Broken Turbine

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Much to the detriment of the state’s rate payers, Deepwater Wind began generating electricity on December 12. Less than three weeks later, one of its five turbines broke (oopsie). As though wind energy isn’t already expensive enough, now we have to add the cost of making repairs thirteen miles out on the ocean. (‘Cause the cost of water and seawater-related repairs is always very reasonable, right, boat owners …?)

It probably was not a coincidence that the company made this embarrassing admission on a day – the Friday before Christmas – sure to glean the absolute minimum amount of public attention.

8

DAILY SIGNAL: State OKs Bans on Transgender Treatments for Minors, TikTok in Bid to Keep Kids Safe

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Montana recently passed a bill banning transgender treatments on minors. “It’s very important that we protect our children, especially physically, from these treatments that are permanent,” Montana state Rep. Kerri Seekins-Crowe says. “There’s not been a lot of studies done on the long-term effects of these [treatments],” the Republican lawmaker said, adding “but we also […]

11

DAILY SIGNAL: Why This Solar Company CEO Wants to Drill, Build Pipelines, and ‘Deploy All Types of Energy’

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Drew Bond, co-founder and president of C3 Solutions, is a serial entrepreneur. Having founded several companies in the energy industry, he now leads an organization that helps conservatives counter the Left’s radical environmental ideas. “I would argue that many conservatives are, in fact, better environmentalists than many in the environmental community,” Bond tells The Daily […]

12

The CRT Alternative: RI Center for Freedom & Prosperity Joins National Civics Alliance to Inspire Reform at State Education Departments

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In Honor of July 4 Independence Day and the Upcoming 250th Anniversary of America’s Birthright of Freedom, the RI Center for Freedom & Prosperity has joined the The Civics Alliance, a national coalition of organizations and individuals dedicated to improving America’s civics education: The Civics Alliance’s model K-12 social studies standards, American Birthright, was launched yesterday, […]

13

The State’s Casino Monopoly and a Wall Street Gamble

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For practical purposes, the Twin River casinos are government run, with the state contracting its monopoly of the gambling market to the private company.  However, it’s worth remember from time to time that isn’t how the market sees the business:

In just over three months as a public company, the owner of the Tiverton Casino Hotel in Rhode Island has rapidly gained a following in the hedge fund community. Currently, 10 hedge funds own shares of Twin River, a massive amount for a $1.22 billion company that does not have two full quarters of trading under its belt. …

Twin River owns the only two casinos in the Ocean State, giving it a competitive advantage there. While a new regional threat is emerging in the form of Wynn’s recently opened Encore Boston Harbor, TRWH has some avenues for stemming the rivalry, including a different target demographic and legalized sports betting.

The entire arrangement has long cried for a thorough public discussion of this unique business model, so as to understand Rhode Islanders’ perspective on having a government that has essentially displaced the mob.  The interface with the investment markets adds another dimension.  Because, as the linked article highlights, the monopoly standing of Twin River is a marketable financial asset, should state and local taxpayers continue to benefit only by our percentage of the gambling profits?

14

Asking the Wrong Question When the Toy Company Thinks About Leaving

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I join others in wondering why it is, exactly, that nobody in Rhode Island government happened to mention that Hasbro was considering a move out of the state until the day after the election.  But the election is over, so we return to our regularly scheduled observations about politicians’ flawed mindset.  Oddly the most telling sentence on this subject has been removed from Tom Mooney’s Providence Journal article since last night:

Grebien said city officials have been talking to Hasbro for several months but that Grebien remains unclear specifically what Hasbro wants in order to stay in the city.

That is simply the wrong question and the wrong attitude, and it shows how politicians’ desire for every decision to run through their hands has put our communities at risk of extortion.  In a healthy political system, Pawtucket Mayor Donald Grebien would be asking what the city and state governments are doing that makes companies want to leave, because we’re doing something wrong if its directors feel as if they can’t remain in the state of their business’s birth.

If the state isn’t doing anything wrong and some factor beyond our control creates the necessity for the move, then we should admit that Rhode Island may no longer be the best fit for the company, or the company for Rhode Island, and society would be better off with more-efficient use of its resources.

18

In Deep Water with Wind Company

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Something feels both odd and not quite right about the fact that Democrat Governor Gina Raimondo is sending out fundraising appeals saying that “Gina can’t see this [new off-shore wind] project through without your support.”  So, if I give Raimondo the requested $10, is that going to keep her political career alive or is it going to facilitate a green energy project?  Should the governor be committing the state to long-term agreements with a private sector company that require the same governor to be reelected?

The whole thing is deeply strange.  A week ago, the Providence Journal announced that Rhode Island had “selected” Deepwater Wind to build a massive off-shore wind farm, but most Rhode Islanders probably didn’t even know we were even looking into the possibility.  As Alex Kuffner reports:

Although it was a Massachusetts process, a little-known clause in the the procurement rules allowed other states in the region to join in if they wanted to. Without making its intentions known publicly, Rhode Island acted on the clause.

Even Deepwater CEO Jeffrey Grybowski seemed surprised.

When last we heard about Deepwater’s “Revolution Wind” project, the company was promising all its jobs and economic development to the New Bedford area.  It looks like Massachusetts chose a different company, but Rhode Island was happy to take seconds.

Ideological disagreement with the governor aside, something just seems off about this whole thing.  A secret deal with a connected company materializes at the nth hour, and the governor starts fundraising off it immediately.  Forgive my cynicism, but it seems like more media attention might flow to this subject if it weren’t a Democrat governor and a fashionable “green energy” project.

19

Revival Brewing Company Shuts Down Customers in Solidarity with Anonymous Libel

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Local brewery Revival Brewing Company has shut down a planned event scheduled for tonight by the Rhode Island chapter of the America’s Future Foundation (AFF) based on a libelous Instagram post asserting that AFF has a hidden white supremacist agenda.  Here’s the Instagram post, which is obviously from somebody who opposes AFF:

anti-aff-post

In repeated comments under the post announcing the cancellation of the event, the Revival Brewing Company Facebook account stated that “regardless of it being true or not, we needed to stop it.”  The company’s account also posted a picture of a card insisting that it stands with “all races, all religions, all countries of origin, all sexual orientations” and “all genders,” while seeming to make no distinctions between an anonymous allegation and fact when it comes to “white supremacy.”

Fortunately for Revival Brewing, conservatives tend to think private companies should have a right to decide who can use their facilities and shouldn’t be forced to “bake the cake,” as progressives insist when Christian bakers opt not to celebrate same-sex wedding ceremonies.  Whether people who value free speech should continue to patronize Revival Brewing Company is another matter.  At best, the company’s owners aren’t as principled as they think they are.  At worst, they’re happy to find excuses to exclude people who are different from them.

ADDENDUM (5:13 p.m., 2/28/18):

When asked why people are calling AFF racist, Revival owner Sean Larkin tells GoLocalProv: “I have [no] idea, I’m more worried about people damaging my business and the lively hood of my employees implicating that we support an organization that is loosely tied to this thought.”  Note that the only “loose tie” between this group and racism is anonymous libel on social media.

20

Contrasting Benny’s with State Bennies

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While sympathetic to the plight of Benny’s employees whose jobs are disappearing out from under them, I can’t help but wonder how many people actually enter retail expecting benefits like severance pay.  Kim Kalunian and Ted Nesi’s WPRI article on the impending closure of all Benny’s stores makes it seem as that must be a thing, but even with a good bit of retail experience, I’ve never heard of it.

Presumably, workers were satisfied with the terms of their employment while it was ongoing.  It would be generous of the company’s owners to offer employees who happen to be working for the stores now that they’re closing an additional, unexpected bonus, but it would be above and beyond what tends to happen in the private sector.

Now contrast that situation with Kathy Gregg’s Providence Journal follow-up article on Democrat Governor Gina Raimondo’s incentive offer to near-retirees on the state’s payroll:

The retirement plan hinges on the one-time payment of an amount twice the “longevity” bonus that each worker, already eligible for retirement, is receiving. Until this bonus-pay program was frozen in 2011, the state automatically gave state workers 5-percent, 10-percent, 15-percent, 17.5-percent and 20-percent pay increases at milestones in their career, such as the 5-year, 10-year or 20-year mark. The cap on Raimondo’s offer: $40,000. …

More assumptions: the departing workers would leave with $8.94 million in retirement-incentive payments and $4.57 million in “severance payments” for all of the unused vacation days and sick time they were allowed to bank over the course of their careers. Assuming the administration replaced 252 of these workers by the end of this budget year — at substantially lower salaries — the Budget Office projected $2,608,406 in state-dollar savings this year.

We really do have two classes in Rhode Island, whose lived experiences and expectations about the world are entirely separate, and politicians (rather than workers’ talents) are the ultimate gatekeepers to the more-desirable one.  In one class, we work by mutual agreement, and all parties are tasked with assessing their own financial needs and adjusting accordingly, seeking the best deals we can as we go.  The other class collects what it needs from taxpayers and makes decisions based on the political clout of special interests (notably labor unions) before considering financial viability.

As Kalunian and Nesi report, the financial reality of defined-benefit retirement plans forced an end to the benefit at Benny’s in 2007.  The state’s, on the other hand, still stands available as another bucket of money and liability into and out of which officials can slop cash so as to create the appearance of fiscal viability in any given year.

21

Should Rhode Islanders Be Confident In Our State’s Elections Integrity?

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Following the release this week of city-by-city and district-by-district voter registration and 2016 election voting research by Ken Block, via his Simpatico Software Systems data analysis company, we call on the Governor and/or the Attorney General to initiate an independent investigation. This shocking data means our current registration practices may need to be amended, with individuals appropriately held accountable, if voters are to maintain confidence in our State’s elections integrity.

22

Observations of Political Scene on Out-of-State Raimondo Fundraising

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Let’s dispense with the minor observation of today’s Political Scene in the Providence Journal:

Rhode Islanders contributed [to Gina Raimondo’s campaign fund] more than any other geographic group — a total of $440,557 between Jan. 1 and June 30 to Raimondo’s anticipated bid for reelection, according to her most recent filings with the state Board of Elections. She banked another $23,025 from Rhode Island-based PACs, such as the RI Laborers PAC and the Hospital Association of Rhode Island.

Isn’t this kind of expected?  In fact, isn’t the more-newsworthy point something that Katherine Gregg never mentions: namely, that Raimondo has received roughly 60% of her donations, this year, from people out of state?  I can’t help but feel that if Raimondo were a Republican the Providence Journal’s question would be the same as mine:  Whom is this woman serving?  A big majority of Raimondo’s political income, so to speak, comes from people out of state.  How central can the state’s interests actually be to her?

The more-intriguing observation (which may help to answer the first) comes from this:

Also among Raimondo’s first-quarter contributors is Peter G. Peterson, a one-time U.S. Commerce secretary and CEO of prominent companies including Lehman Brothers before founding the private equity firm Blackstone Group, which he grew “into a global leader in alternative investments,″ according to his online biography.

This may be mostly a story about how small the world of investment elites actually is, but as I’ve detailed before, Blackstone purchased the parent company of Wexford — of I-195-subsidy fame — in 2015 and spun off the Wexford component in 2016.  It would go beyond the scope of my resources to investigate the amount of profit these transactions created and sort out the timing of Raimondo’s Commerce RI dealings with Wexford, but it’s telling nonetheless.

Regardless of the specifics, one could easily summarize that the governor Rhode Island receives a substantial majority of her political donations from people outside of the state that she governs, and some not-insignificant number of her donors are conspicuously connected to deals that she makes as the governor.  These associations sure ought to raise more questions than those posed by a weekly political-interest column.

23

Money-Grubbing Company’s CEO Praises Politician Who Paid Him

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It’s tempting to wonder whether Democrat Governor Gina Raimondo made a governor-praising op-ed by CEO Bob Baird a condition of the state government’s tax-dollar handout to pen-company A.T. Cross:

Enter Gov. Gina Raimondo. In 2014, soon after she was elected, Governor Raimondo called to tell us she loved our history in Rhode Island and looked forward to using a Cross pen to put her signature on official documents. Later, when the governor and her team learned we were talking to other states about pulling up our roots and beginning anew somewhere else, they made it clear they value Rhode Island companies that have been here all along. The governor, Commerce Secretary Stefan Pryor and their team made a compelling case that our business is best served by staying in Rhode Island and that our employees will find everything they are looking for here at home.

Most likely, though, the CEO’s public promotion of the governor was more of a wink and nod affair than a contractual stipulation, or maybe it’s simple etiquette in the you-scratch-my-back-I’ll-scratch-yours crowd.

I will say that I’ll never deliberately buy an A.T. Cross pen, now, although if the company decides to send a thank you gift to every Rhode Islander for our involuntary contribution to the company’s bottom line, I’ll take one.

24

Disgraced Speaker Fox Fueled the ShapeUp State-Taxpayer Gravytrain

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Responding to a question related to my finding that ShapeUp, which made news recently when its new owner, Virgin Pulse, agreed to remain in Rhode Island in exchange for $5.7 million in state-government subsidies, a Rhode Island House spokesman tells me that the Economic Development Corp. (EDC, now the Commerce Corp.) and Dept. of Health weren’t the only government agencies that whet the company’s appetite for taxpayer dollars.

Disgraced and imprisoned former Speaker of the House Gordon Fox, a progressive Providence Democrat, directed $12,000 to ShapeUp through the General Assembly’s controversial legislative grant program.  The first $7,000 installment of that money arrived in 2007, shortly after the non-profit started.  Another $5,000, half in 2010 and half in 2012, flowed the company’s way as it moved toward for-profit status and received its $100,000 EDC handout.

One wonders how much companies that buy Rhode Island start-ups consider the many paths of claiming Rhode Island taxpayer dollars when shopping for acquisitions.

25

How Much to Lure High-Tech Company into Low-Tech Building?

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When I hear that Internet innovator PayPal is considering a move into the Providence Superman Building — which has been vacant for so long, if I recall correctly, in part because it lacks capacity for the technology of modern companies — I can’t help but wonder what the dollar amounts will be.  Here are Ted Nesi and Dan McGowan:

Matt Sheaff, a spokesman for the R.I. Commerce Corporation, declined Wednesday to comment specifically on whether PayPal is looking at the building but confirmed that state officials remain in active discussions with the company about potentially expanding into Rhode Island. …

One sticking point on a PayPal-Superman deal could be cost. [Owner David] Sweetser has repeatedly argued the building needs significant renovations that cannot be funded without government assistance.

Oh, and don’t forget: “Any transaction would also likely require a break on Providence property taxes, which are among the highest in the country for commercial real estate.”

So Rhode Island’s economic development strategy is to create an environment in which businesses have difficulty operating and “iconic” old buildings can’t find non-government investment to bring them up to date.  Then the governor goes out looking for big companies that would represent, as the article puts it, “a major coup” and promises to give them money taken from the  residents and businesses who are still able to manage to survive in the state, somehow.

This approach may do wonders for political insiders and corporate big-wigs looking for crony relationships.  For the rest of us — particularly those of us struggling to get ahead in the world — not so much.

26

So the ProvPort Non-Profit Operating Company is Just a Front?

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One of the poorly (deliberately?) advertised additions to the 2017 budget last night was a $20 million bond proposal which would fund the acquisition by the Port of Providence of certain properties on Allens Avenue. RI Center for Freedom and Prosperity CEO Mike Stenhouse accurately calls the bonds more corporate welfare.

GoLocalProv’s Kate Nagle has an excellent investigative report showing that

ProvPort, the non-profit operator of the Port of Providence seeking a $20 million taxpayer bond, paid management fees to a sister for-profit company of more than $11 million over the three most recently reported years. The $11 million is approximately half on ProvPort’s total revenue. …

The relationship between the non-profit and for-profit raises concerns. The non-profit takes in the money, only has one employee, and transfers millions every year over to a for-profit company.

Probably this arrangement is legal, though it certainly seems like a convenient set up to avoid corporate taxes.

So the proposition by Smith Hill leaders is that we should pay our hard-earned tax dollars to help fund real estate acquisitions for a company that is attempting to DODGE taxes? And, no, it doesn’t mitigate the situation that the state would own the new parcels. The parcels would still benefit ProPort, not to mention the larger point that state government should get smaller, not larger.

Look, I don’t want to have to look at or care about the corporate structure or tax arrangements of a company. But you’re forcing me to by proposing to reach into my wallet on their behalf. Out of all of the bond referenda on the ballot this November, this should be the easiest and fastest “No” of the bunch.

27

Magaziner Exemplifies State’s Skewed Priorities

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One can just about sympathize with Democrat General Treasurer Seth Magaziner.  When taxpayers across the state are complaining on talk radio that the tax return checks with his name on them seem greatly delayed and when the pension fund under his control is actually losing money, the politician must feel an intense pressure to come up with newspaper headlines that somebody might see as positive:

On Wednesday, Rhode Island Gen. Treas. Seth Magaziner announced a new policy that seeks to use the proxy-voting power that comes with Rhode Island’s billions of investment dollars to encourage companies to place more women and racial minorities on their boards of directors.

Unfortunately, many people fall for foolish politically correct showboating.  Heretofore, the state’s index-fund manager, State Street Corp., has done the voting to which Rhode Island’s investments entitle the state.  Presumably, State Street’s votes have been cast with an eye toward maximizing returns on its clients’ investments.

But maximizing returns is clearly not the priority of Rhode Island’s chief fiduciary, Seth Magaziner.  Worse still, not only does Magaziner acknowledge that Rhode Island’s votes may make little difference, but the method by which it will cast them is hot-pan-on-a-silk-tablecloth dumb:

“Any time a man is nominated to be a director at a company where fewer than 30 percent of existing directors are women (or racial minorities), we will vote no. If we end up voting no at a high rate, we will be making an important statement on the financial materiality of board diversity,” Magaziner said.

No individual consideration.  All that matters is body parts and skin color.  Of course, I’m making an assumption, there; Providence Journal reporter Kathy Gregg didn’t ask Magaziner if the vote will be cast according to biological fact or by the personal assertions of the nominee.

28

Ocean State Job Lot? You Didn’t Build That.

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RI Commerce Secretary Stefan Pryor puts President Obama’s “you didn’t build that” philosophy into practice when asked whether Ocean State Job Lot is justified in complaining about the state’s unilateral change of the terms of its Rhode Island operation.

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