Nesi’s Notes: Dec. 17

The Saturday Morning Post | Quick hits on politics and more in RI

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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. They say it takes three to make a trend – if so, that’s very good news for Governor Raimondo. The announcement coming Monday that Johnson & Johnson plans to open a new Rhode Island office will mark the third time since April Raimondo has convinced a huge multinational company to put tech jobs in the state, following on the heels of GE Digital in April and Virgin Pulse just this week. These are huge enterprises with deep pockets that should be around for a long time; having them set up shop in Rhode Island creates new economic opportunities for the state. And the more it happens, the more it looks like a repeatable formula rather than a fluke. “Along with this month’s positive economic data, we are heading into the New Year with strong momentum to grow jobs and make the state a place of opportunity for everyone,” Raimondo crowed Thursday. If there’s a fly in the ointment, it’s the fact she has to hand out tax breaks to make all these deals happen – particularly in the case of the heavily subsidized Wexford 195 complex, which was also finalized this week. Raimondo’s aides are quick to point out she’s no outlier there – see Donald Trump in Indiana or Charlie Baker just up 95 – but that doesn’t mean taxpayers have to like it. Nevertheless, Raimondo and her team can enjoy the holidays basking in some good news. The challenge they’ll face come January: keep the trend going.

2. Something else for Governor Raimondo to keep in mind come 2017: making sure Rhode Island’s economic revival reaches everyone. This week’s data shows the state unemployment rate has fallen to its lowest level since mid-2007, but there are worrying signs under the hood. The share of Rhode Islanders 16-and-older with a job is only 61% today – it was 65% just before the Great Recession. You might think that’s because the population is getting older, which it is, but other data shows employment has fallen considerably even among prime working-age residents 25 to 54. Why is that happening? And will the sorts of jobs being created by GE, Virgin and Johnson & Johnson help those “lost” workers?

3. The arrival of new companies gets big headlines, but Rhode Island policymakers should never forget the importance of companies that are already here. Two of them are spotlighted on this week’s Executive Suite – ChemArt, the 40-year-old Lincoln manufacturer that makes the White House Christmas ornament, and the Virginia & Spanish Peanut Co., a Providence family’s century-old food business. In fairness, politicians honored both companies at news conferences in recent years (and ChemArt founder Richard Beaupre made clear on the show he thinks the governor is on the right track). Another example this week: Tedor, a Cumberland pharma company, announced it’s expanding its manufacturing facility in a project that doesn’t appear to have received any state tax breaks.

4. Speaking of Rhode Island companies, keep an eye on Alexion Pharmaceuticals, which makes its blockbuster drug Soliris at the old Alpha Beta plant in Smithfield. Alexion’s CEO and CFO were abruptly replaced this week, and Bloomberg News reports their departures stem from an allegation that “something was fishy about the way it sold Soliris.”

5. As Deepwater Wind’s turbines started spinning off Block Island this week, launching offshore wind in the United States, you’d be forgiven for thinking it was a Democratic-led initiative. The project’s launch has been heralded by President Obama, Governor Raimondo, Senator Reed, The New York Times, environmental groups, and so on. Missing in most coverage is the name of the man who did the most to make Deepwater happen: Republican Gov. Don Carcieri. Many seem to have forgotten that Carcieri championed the project despite wariness from Democrats and hostility in his own party. But Carcieri had a vision. “We don’t have oil. We don’t have natural gas. We don’t have large areas on land where we could then build wind farms,” the then-governor told me in 2008. “Our only option, frankly, that we can control – absent nuclear, something that’s pretty dramatic – is wind, and it’s offshore wind. … So I’ve been really pushing it, because I believe it’s the one thing we can do to stabilize our energy costs.” Carcieri keeps a low profile these days, but I’m told he recently took a private boat ride out to see Deepwater’s turbines in action. Opponents of the Deepwater project will continue to think the former governor made an error in backing it. But Democrats who are happy to see their state out front on offshore wind can thank Carcieri.

6. Clay Pell’s name has been back in the air these days, with his outspokenness over Russia as an Electoral College member and buzz among Democrats that he could run for governor, attorney general or another office in 2018. But Pell wouldn’t bite when I asked him about that speculation this week, saying he is spending his time on his duties as an elector. “I’m really focused on the 2016 election,” he said. Perhaps Pell will have more to say in the new year.

7. U.S. Sen. Sheldon Whitehouse strongly disagrees with Donald Trump on a host of issues. He was a passionate Hillary Clinton supporter. He’s pledging to oppose changes to Social Security or Medicare, and promising to probe the new administration’s potential conflicts of interest. Yet Whitehouse says he also sees areas of common ground with Trump – such as trade policy or closing the carried-interest tax loophole – and disagrees with arguments that Democrats should avoid collaborating with him. “If the reason you’re in this is because you want to help people, then why would you tell a president who has agreed with you on something, ‘We agree, but just because of who you are, I’m not going to work with you’?” Whitehouse said on this week’s Newsmakers. “Now, that politically worked for the Republicans to do to President Obama, so there’s logic to the progressive voices that are saying that. But I just don’t think it’s who we are as Democrats, and I do think that if we can get rid of some of these things, and do, like, a good infrastructure bill, we should be for that.”

8. Senator Whitehouse made a number of other interesting comments on Newsmakers. … He stands by his reasoning for backing Hillary Clinton over Bernie Sanders, namely that the Vermont senator couldn’t withstand Republican attacks. … He has some pointed criticism for President Obama and how he hurt the Democratic Party. … He opposes legalizing recreational marijuana in Rhode Island. … And he’s definitely running for re-election in 2018.

9. Rhode Island’s state pension shortfall is up again, now totaling $4.63 billion, after continued weak investment performance. One of many interesting stats in the actuaries’ new report is the table showing how much taxpayers’ annual bill for pensions has grown in recent years. In 2002-03, the state contribution for state employees’ pensions was less than 8% of payroll; today it’s more than 25%. Put a different way, this budget year’s pension contribution for state employees totals $176 million, but it would only be $53 million if the rate was still at its 2002-03 level; the difference between those two amounts is $122 million, more than next year’s entire projected deficit. Active state employees also put plenty of money into the pension fund annually – about $40 million a year – though their contribution is forecast to be the same amount 10 years from now, while the state’s contribution is expected to rise by an additional $76 million.

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10. Our weekly dispatch from WPRI.com’s Dan McGowan: “It was no surprise to hear Mayor Elorza say he disagrees with Alan Hassenfeld and Ken Block’s recommendation that Providence be put into bankruptcy, but the first-term Democrat knows he’s got work to do to shore up the city’s long-term finances. So what’s he doing about it? Planning. Remember that study he always talks about that gave the city a bunch of ideas for how to increase revenues and cut liabilities? He’s now waiting on four working groups to lay out a plan of attack for the future: one of the groups is focused on capital budgeting; another is looking at new revenue sources (hello Water Board); a third group is studying a potential deal with the city’s nonprofits, which the mayor hopes will be more predictable and could involve more than just simple cash transactions; and the fourth is the big one, retirement liabilities. Elorza told me this week he’s hopeful he can reach a ‘grand bargain’ with the city’s retirees, but he acknowledged he doesn’t have a concrete proposal yet. One option he floated was extending the current 10-year freeze on cost-of-living adjustments (COLAs) until the pension system reaches a healthier funding level, similar to what the state did five years ago. But he acknowledged that might not be enough and said he wants to craft a once-and-for-all plan so that the next mayor doesn’t have to go back to the retirees again. For now, the planning continues. But Elorza said all of the working groups should produce reports in 2017.”

11. The politics of the car tax should be mighty interesting when the General Assembly convenes next month. Speaker Mattiello’s position is clear and easy to understand: the car tax is going away over the next five years, and the state is going to replace all the revenue municipalities will lose from its elimination (roughly $215 million all told). But Senate President Paiva Weed repeated her reservations about his plan this week, suggesting it will reward communities where the car tax is too high because spending is too high. Both their positions make sense for their districts, since there’s no uniformity to the car tax’s bite across the state. In Mattiello’s Cranston, the car tax levy totals $20 million and makes up 11% of the property tax levy; in Paiva Weed’s Newport, it totals $2 million and makes up just 3% of the levy. Such gaps exist all over – compare, say, Providence ($35 million in car taxes, 10% of the levy) to Portsmouth ($2 million, 4%). Mattiello’s aides can counter that Cranston and Providence have already tightened their belts by, for instance, reducing pensions. Where will Governor Raimondo come down?

12. Allan Fung got some face time with one of President-elect Trump’s new cabinet appointees last weekend. Fung and his wife, Barbara Ann, were in New York City for a conference where Elaine Chao, Trump’s pick for transportation secretary, and her father were both speaking. Fung told me he’s known Chao for a number of years through the Chinese-American community. “We sat together at dinner and got a chance to chat,” he said. “She was definitely excited and looking forward to her new role.” (Chao’s spouse is also a big name in D.C.: Senate Majority Leader Mitch McConnell.)

13. Amtrak’s new high-speed rail plan doesn’t bypass Providence after all – but Connecticut officials say the plan is dead on arrival.

14. Famed New Yorker writer John Lahr is out with a big profile of Rhode Island native Viola Davis, with a powerful portrait of her tough upbringing in Central Falls. (Fun fact: Lahr is the son of Bert Lahr, who played the Cowardly Lion in “The Wizard of Oz” with Judy Garland.)

15. Is print the future of news?

16. The case against giving canned goods to the food bank.

17. This FT letter to the editor will make you think.

18. Set your DVRs: This week on Newsmakers – U.S. Sen. Sheldon Whitehouse. This week on Executive Suite – ChemArt CEO Richard Beaupre; former Virginia & Spanish Peanut Co. co-owners Peter and Robert Kaloostian. 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 writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter, Facebook and Instagram

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