Report warns of consequences to 38 Studios default

Curt Schilling

Calls to pay what Rhode Island owes for its failed investment in Curt Schilling's 38 Studios are growing louder as a business-backed public policy group warned of dire consequences should the state default.

The Rhode Island Public Expenditure Council issued a report Tuesday predicting that defaulting on the debt would hurt the state's bond rating and increase borrowing costs. The report suggests those costs would exceed the $90 million the state still owes for the loan guarantee given to the failed video game company started by former Red Sox pitcher.

On Monday Moody's Investor Service downgraded the bonds issued for the deal, noting that many lawmakers favor defaulting.

Gov. Lincoln Chafee says the downgrade shows defaulting is a bad idea and that he believes the state will honor the debt.