Chafee slams GOP candidates on 38 Studios debt

Gov. Lincoln Chafee

Gov. Lincoln Chafee traded biting words Tuesday with two Republican gubernatorial candidates who say the state should walk away from the 38 Studios debt.38 Studios got a $75 million taxpayer-backed loan to come to Rhode Island from Massachusetts.

When Curt Schilling's video game company went belly up two years ago, taxpayers were left on the hook.

Lawmakers are debating whether to pay back the moral obligation bonds, with the next installment of $12.5 million being debated in the budget process.

Chafee, who opposed the 38 Studios deal from the beginning, is in favor of paying back the bonds. He said to not pay would hurt the state's investing reputation, bringing state bonds to junk bond status. The governor made sure to single out Republican gubernatorial candidates Cranston Mayor Allan Fung and businessman Ken Block for their opposition to paying back the bonds.

Chafee first said in a statement if they can't understand the reasons to pay the bonds back, then they are unfit to be governor. He elaborated in an interview with NBC 10 News.

"I think it would be cataclysmic for Rhode Island. I really feel strongly about this. We have to pay our debts like any person that gets into trouble as we did with 38 Studios. You have to pay your debt," Chafee said. "Unfortunately, I feel like these candidates are just pandering to a primary base and it's unfortunate."

Fung fired back in a statement.

"The lack of understanding begins with Governor Chafee, whose commitment to the institutional bondholders and other financial elites far outweighs concern for the average Rhode Island taxpayer," Fung said.

Democratic candidates Gina Raimondo, Angel Taveras and Clay Pell support making the bond payments.

House Democrats and Republicans are meeting in their respective groups to talk about the bond issue.

A consultant brought in by the governor's office to look at the repayment issue is expected to testify Tuesday night at a committee hearing that to not repay the bonds would be disastrous.