Ted Nesi’s Saturday Morning Post: Oct. 22

Quick hits on politics, money and more in Rhode Island

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Happy Saturday! Here’s another edition of my weekend column for WPRI.com – as always, send your takes, tips and trial balloons to tnesi@wpri.com, and follow @tednesi on Twitter.

1. Another week, another big headline in one of Rhode Island’s most important economic development stories. No, not Curt Schilling’s 38 Studios interview – rather, the collapse of Care New England’s merger with Southcoast. It’s not that 38 Studios doesn’t matter (though the state has been picking over its carcass for more than four years now). But the future of Care New England has major implications for Rhode Island’s economy – and unlike with 38 Studios, the final outcome will be shaped by actions taken today. CNE is the state’s second-largest hospital group (after Lifespan) and its fourth-largest employer, with roughly 7,500 workers. CNE’s flagship, Women & Infants, has a reputation for excellence, and the organization has close ties to Brown University’s medical school. It’s involved in the sort of advanced research Governor Raimondo and others are banking on for future growth. But CNE’s own CEO admits its finances are precarious, particularly since the 2013 acquisition of Memorial Hospital, which is part of why he wound up pushing the Southcoast merger. With that off the table, CNE’s next move is a big deal. It seems unlikely CNE will remain independent. Will state leaders push for a Lifespan-CNE merger yet again? Plenty of people think that makes sense, but it may raise federal monopoly concerns. Will Steward or another for-profit company make a bid, accelerating the Rhode Island hospital sector’s shift toward domination by for-profits? And will CNE’s hospitals wind up under out-of-state control, as presaged by the aborted Southcoast deal? The CNE story may not be as sexy as the Schilling one, but its final resolution will reverberate for years.

2. The big Curt Schilling interview on WPRO was undoubtedly a coup for the radio station and host John DePetro, and the ex-pitcher’s touched on a lot of aspects of 38 Studio over the course of three hours. He certainly made news with his criminal accusations, which will likely only increase public frustration with the lack of charges stemming from Attorney General Peter Kilmartin’s probe. (Kathy Gregg likely spoke for many when she asked why Schilling was never called before the grand jury to share the information he provided on the radio.) Schilling also acknowledged he was a hands-off company chairman, seemingly unfamiliar with the details of 38 Studios’ finances. Yet as Ian Donnis summed it up, “Ultimately, he mostly reaffirmed what we already know about 38 Studios – that a handful of insiders wired the deal to move ahead with a pronounced lack of transparency.” There are still unanswered questions about the deal – mostly the murky period of mid-2009 to early 2010, when Democratic legislative leaders were secretly in communication with company officials – but who knows whether they’ll ever be answered?

3. What a difference a month makes. Just before the first debate on Sept. 26, Democrats were starting to panic over Donald Trump’s rise in the polls. With the debates over, however, the election now looks like Hillary Clinton’s to lose, and it’s possible she could beat Barack Obama’s margin of victory not only in 2012 but even in 2008. What does that mean for Rhode Island? There’s been little reliable polling conducted here, but it’s all but impossible to imagine Clinton losing the state if she’s winning nationwide. The question then becomes her local margin of victory. Democrats have won Rhode Island by at least 20 percentage points in every presidential election this century, but Trump’s above-average appeal to white working-class voters had suggested he might cut into that margin more than Mitt Romney, John McCain or George W. Bush could. That possibility still exists, but its likelihood shrinks as Trump fades. One good proxy for how Rhode Island will vote is Massachusetts, where the Democratic nominee’s margin of victory has always been within 5 points of their Rhode Island margins during the past four cycles. And a new poll out this week shows Clinton ahead of Trump by 26 points in the Bay State.

4. Rhode Island’s electorate will be slightly more partisan this fall than it was a few months ago. The number of registered voters rose by about 28,000 between February and last week’s pre-election deadline, well below the increase of 42,000 during the same period of 2008. The Democrats added 23,000 voters and the Republicans added 14,000, but the number of unaffiliated voters fell by almost 10,000. (Unclear how those numbers were impacted by the DMV computer screw-up revealed Friday evening.) One thing to watch is how high voter turnout goes next month. Turnout totaled 450,000 voters in 2012 (62%) and 472,000 voters in 2008 (67%).

5. No surprise – Joe Fleming’s new poll for Gary Sasse’s Hassenfeld Institute at Bryant shows all five state bond referendums on track for victory next month. (Contrary to popular belief, bond referendums do fail once in a while in Rhode Island – proposals were defeated in the 2000s related to Heritage Harbor, Quonset, Meade Stadium at URI and Fort Adams.) More interesting is the right direction/wrong direction number, which slightly improved since May but remains underwater, with 36% of voters saying the state is on the right track and 43% saying it’s on the wrong track. That level of dissatisfaction should be a concern to Governor Raimondo as she looks ahead to her 2018 re-election race.

6. Our weekly Saturday Morning Post dispatch from WPRI.com’s Dan McGowan: “We haven’t seen this much tension between the mayor’s office and the City Council since David Cicilline was running the city – and things don’t look like they’re going to get much easier as Mayor Elorza heads into the most important year of his first term. So who’s to blame? Both sides. The mayor has won praise from outsiders in recent weeks for accusing the council of trying to create a ‘slush fund’ with a proposed $40-million bond, but those two words – which were uttered before the plan was discussed in committee – may have killed a slew of projects the city desperately needs. The truth is council members aren’t wrong when they point out that the administration popped this bond issue on them at the very last minute and expected them to allow it to sail through with little negotiation. As some councilors see it, the bond debacle is the latest example of an administration that is plagued by arrogance and inexperience, a politically deadly combination. Of course, the council doesn’t help itself. Aside from Council President Luis Aponte and Councilman Kevin Jackson facing legal problems, the Finance Committee never makes things easy. The idea that the city’s finances – not politics – is the leading reason the bond proposal may not materialize is laughable. At the same time, Finance Chairman John Igliozzi appears to be threatening to hold up the proposed firefighter contract as he seeks pension changes that, while beneficial, probably aren’t worth killing the deal over. (Of course, as Igliozzi accurately points out, this agreement is a solution to a problem the administration created.) From a bigger perspective, the dispute between the two branches of government is good for headlines, but a bad sign for the city. Folks on the state level are cringing over the fact that 16 Democrats can’t get an infrastructure bond completed. And if they can’t get that done, how are they supposed to solve the city’s large problems?”

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7. Cranston mayoral candidates Allan Fung and Michael Sepe met Friday for one of the feistiest Newsmakers debates Tim White and I have ever done. They touched on a lot of local issues – taxes, spending, panhandling, infrastructure, and, especially, each others’ records – but also answered questions about their support for controversial politicians. Fung, who repeatedly danced around questions on his 2018 gubernatorial ambitions, confirmed he is still supporting Donald Trump for president. “I would not like the direction that his opponent Hillary Clinton would bring this country, especially on fiscal issues, border security – those are issues that are important to me,” Fung said. Meanwhile, Sepe defended taking a $100 contribution from scandal-tarred Rep. John Carnevale, who attended a Sepe fundraiser in late August. “I didn’t see any problem accepting his donation,” Sepe said, adding: “He didn’t break the law – only he would have broken the law if he ran again.”

8. Don’t forget: Speaker Mattiello debates Steven Frias Nov. 4 on Newsmakers.

9. Thursday’s House hearing on the $364-million UHIP project gave lawmakers an opportunity to vent their frustration about the system’s problems (and to do so in front of TV cameras shortly before Election Day). A day earlier Governor Raimondo sat down with my colleague Susan Campbell to discuss the situation, pushing the administration’s message that the system is working of “the vast majority” of users. She denied that she’s gone too easy on Deloitte, the main contractor on the project (which has done pro bono work for her office). “I’ve been all over Deloitte,” Raimondo said, while acknowledging she shouldn’t need to push them as hard as she says she does. Susan also asked the governor whether her mantra of holding people accountable means someone will lose their job over UHIP: “Not at this point,” Raimondo said. And she told a story from her visit to a DHS office that suggested why it may be difficult to transition some of those who use social services to a computer-based system. “I spent some time watching a guy try to sign up for benefits,” she recalled. “I saw him, he was looking at the computer for awhile, and I said, ‘Can I help you? I’m trying to learn how we can be better.’ And he said, ‘I don’t know how to do the @ symbol on the computer.’ So I showed him, shift-2. And so you have to realize that’s what we’re doing here.”

10. Governor Raimondo will be at her alma mater today to receive the Yale Law School Association Award of Merit during an Alumni Weekend luncheon. This year’s other recipient is Raimondo’s fellow Democratic governor, Jerry Brown of California. There’s a slight gap in ages between the two honorees, though – Raimondo was Class of 1998, while Brown was Class of 1964. Brown is the nation’s oldest governor, while Raimondo is its second-youngest (she has eight months on South Carolina’s Nikki Haley).

11. Senate President Teresa Paiva Weed had an amusing moment on stage at this week’s RIPEC dinner, slipping up and referring to House Finance Committee Chairman Marvin Abney as “Speaker Abney.” (Wishful thinking about January, Madame President? Just kidding.) Paiva Weed gave the business crowd a bullish overview of Rhode Island’s economic trajectory, saying, “It takes time to turn the ship of state around, but we are seeing results.” She lamented “a breakdown” in business-government collaboration earlier this year over career-technical education, a RIPEC priority backed by Speaker Mattiello. She also drew what sounded like a line in the sand in response to Mattiello’s announced plans to cut car taxes if he wins re-election, warning: “We cannot penalize the fiscally responsible communities in our efforts to secure property tax reform without first ensuring uniformity and fairness throughout our 39 cities and towns in the methodology of taxation.” Meantime, R.I. League of Cities and Towns President Don Grebien says his group is already in talks with Mattiello about what the changes to the car tax could look like.

12. Mark Zandi, the famed and oft-quoted chief economist at Moody’s Economy.com, was the keynote speaker at RIPEC’s dinner and delivered a generally optimistic take on the U.S. economy’s prospects, highlighting steady job growth and signs of rising wages. He also touched a bit on Rhode Island specifically. “The key reason why the Rhode Island economy has lagged, in my mind, behind much of the rest of the country is because of the very tough demographics here,” Zandi said. “Your population has basically gone flat in the last 10 to 15 years, and the Millennials haven’t really been able to form households.” He predicted that may start to change as young adults finally find their economic footing, and also suggested a change in immigration policy under the next president could pay dividends locally. “For a state like Rhode Island that’s starved for people … there’s no better elixir to economic growth than having skilled immigrants come into the country,” he argued.

13. Along those lines, here’s a striking stat from Nielsen on the aging of Rhode Island’s population: from 2014 to 2019, the state’s 65-and-older population is expected to grow 13%, increasing by about 21,000 residents; over the same period, the under-65 population is expected to shrink by 3%, decreasing by about 25,000 residents.

14. Treasurer Magaziner’s decision to shift pension money from hedge funds to private equity could get more scrutiny now that the nation’s largest pension fund, Calpers, is expressing concern about the sector. Asked to respond, Magaziner spokesman Evan England said: “Historically, Rhode Island’s investments in private equity have been our strongest performer and yet has been a smaller part of our portfolio than most of our peers. Under the ‘Back to Basics’ plan, private equity will be gradually raised from 7% to 12% of our portfolio over the next five years. This slow and deliberate process will allow our investment team to be extremely selective in choosing managers and reduces risk, both of which are keys to securing growth for taxpayers and retirees.” For a different view, look at Nevada’s “do-nothing” investment approach, which involves one employee and costs 85% less in fees.

15. Susan Campbell looks at what Rhode Island is doing about its many dangerous dams. U.S. Sen. Jack Reed’s office notes he recently passed bipartisan legislation that could send Rhode Island up to $700,000 in federal grants each year to address high-hazard dams. “Dams are a crucial part of our infrastructure and dam safety is critical to public safety,” Reed said, arguing the money “makes an investment in future cost savings, not to mention lives and property saved.” Reed’s measure isn’t in the House version of the bill, so now it’s a waiting game to see whether the House-Senate conference committee decides to include it.

16. The WSJ profiles “SNL” set designer and Rhode Islander Eugene Lee.

17. Is celebrity culture damaging future generations?

18. In 2020 a Millennial can run for president for the first time. (h/t Jon Lovett)

19. On the greatness of “It’s the Great Pumpkin, Charlie Brown.” (It airs Friday.)

20. Set your DVRs: This week on Newsmakers – a debate between Cranston mayoral candidates Allan Fung and Michael Sepe. This week on Executive SuiteMartin Keen, founder of Focal Upright Furniture. Watch Saturday at 10:30 p.m. or Sunday at 8 p.m. on myRITV (or Sunday at 6 a.m. on Fox). Catch both shows back-to-back on your radio Sundays at 6 p.m. on WPRO-AM 630 and WEAN-FM 99.7. And you can subscribe to both shows as iTunes podcasts – click here for Executive Suite and click here for Newsmakers. See you back here next Saturday morning.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He hosts Executive Suite and writes The Saturday Morning Post. Follow him on Twitter, Facebook and Instagram