Issue Position: 38 Studios

Issue Position

As referenced in the section above, the 38 studios debacle was born out of a program that was based on the idea that offering loans to businesses in our state would enable them to grow, or at least sustain themselves through the bulk of the recession and then blossom into a foundation of successful businesses that formed our "new growth" industry and attracted more firms to move to RI or start up in RI.

At some point in the process after the loan guaranty program was created, a small group of individuals from both political parties endeavored to divert the overwhelming majority of money in the loan guaranty program to one firm. That firm was the now-infamous "38 Studios."

My position is simple, and my position is legally rock-solid. We, as a state, DO NOT owe the money that was bonded for 38 Studios through Moral Obligation Bonds. Moral Obligation Bonds are a creation by some of the country's most dubious and questionable characters in our history. A Moral Obligation Bond is not approved by the tax payers through a vote. They are not approved by the legislature that represents the taxpayers through a vote. They are simply underwritten at the behest of individuals within government to be used for projects, and they never receive the broad-based scrutiny that Revenue Bonds or General Obligation Bonds are subjected to.

A certain few "leaders" in RI's government put this plan together with EDC and 38 Studios and the entire project failed. It failed quickly, and miserably. Now the taxpayers of our state are being forced to pay back these bonds - that we are not legally obligated to pay, by the legislature. When all the payments are made, taxpayers will have spent approximately $106 to $120 million dollars to pay these bonds back.

As the Secretary of the House Oversight Committee I can state with certainty that this committee was never allowed to sincerely pursue getting answers about the failures behind this program under the old leadership. In fact - as one of the more outspoken committee members, I was shut down on several occasions when I attempted to get information that I believe taxpayers are entitled to, and the committee itself had actually stopped hearings about 38 Studios altogether since last summer. This is supposed to be a committee that "Oversees" the goings-on in our state government and when I made attempts to do exactly that, I was rebuffed.

It's my opinion that the former House leadership - who I believe bears the majority of the responsibility for this fiasco, was hoping that some Oversight meetings would be held, they would conclude, and then the Leadership could claim that they "made every effort to investigate the Loan Guaranty Program" and found no wrong doing.

I - along with several other House members have entered multiple pieces of legislation that are aimed at getting to the truth regarding 38 Studios. However, when the Speaker of the House changed, so did the Oversight Committee. In addition to new chairmen and also with my appointment as Secretary to the committee I believe we will be able to finally pursue this without the fear of obstructions.

If we can't get answers that we need, I expect that the House Finance Committee will continue to make annual $12.5 million dollar payments though the state budgeting process, and as long as they are doing this, I will fight it tooth and nail, and will NEVER vote for a budget that has this money allocated in it.

Source