RI Senate sends $8.2B budget to Chafee
The Rhode Island Senate approved an $8.2 billion budget Thursday, sending the spending plan to Gov. Lincoln Chafee after rejecting further attempts to default on the debt the state owes for its losing gamble on Curt Schilling's 38 Studios.
Chafee could sign the budget as early as Friday. It contains no tax or fee increases and boosts spending on public schools and higher education by $40 million. It also authorizes $35 million in historic tax credits and eliminates the sales tax on artistic works and performances.
The budget also delays plans for a toll on the Sakonnet River Bridge until at least February to give the state time to study alternatives. Residents in the East Bay had complained that the toll, set to begin next month, would be an unfair burden.
Like the House did the day before, the Senate debated and then soundly defeated attempts by some lawmakers to default on the money it owes for the $75 million loan guarantee given to 38 Studios, the video game company started by former Red Sox pitcher Schilling. The budget calls for a $2.5 million debt payment next May.
The Senate voted 31-7 to reject an amendment from Sen. Leo Raptakis that would have blocked the payment. Lawmakers in favor of making the payment said defaulting would hurt the state's bond rating and raise the cost of borrowing for roads, university buildings and municipal projects.
"I would bet that the rating agencies... would want to make an example of us and that example would cost us dearly," said Senate Finance Chairman Daniel DaPonte, D-East Providence. "I am not willing to gamble and roll the dice."
The collapse of 38 Studios put the state on the hook for $112 million, including interest, with $90 million in outstanding payments. After the initial $2.5 million payment next year, the state plans to make annual payments of $12.5 million. The state's Economic Development Corp. board approved the loan guarantee to 38 Studios in 2010 hoping to create high-paying jobs, but the company filed for bankruptcy last year.
Look for the debate to return next year when lawmakers will be asked to set aside money for the next payment.
"Many of us are very angry about what took place," said Raptakis, D-Coventry. "It's about time that we say the buck stops here."
The overall budget passed the Senate 32-6. Chafee has seven days to act on the legislation. He could sign it, veto it or allow it to become law without his signature.
Chafee, a Democrat, supports making the 38 Studios debt payment. His initial budget recommendation included a call to reduce business taxes and provide more state assistance to struggling cities and towns, but those provisions weren't included in the budget passed by the General Assembly.
Lawmakers hope to wrap up their annual session before July 4.