Robitaille: 38 Studios lesson is don’t pick winners and losers

John Robitaille, the former aide to Governor Carcieri who placed second in Rhode Island’s 2010 gubernatorial race, says the financial turmoil at Curt Schilling’s 38 Studios shows why government shouldn’t pick winners and losers.

Robitaille compared the deal to the Obama administration’s controversial support for Solyndra, and the Republican said he expressed concern at the time about the $75 million taxpayer-guaranteed loan that Carcieri and the R.I. Economic Development Corporation board approved in July 2010 with Democratic legislators’ support.

“Initially I was not in favor of it, but once it was approved and signed off on, absolutely I was on board to make sure it was successful,” Robitaille told in a phone interview on Tuesday. “My initial position was that it appeared to be risky and that I’d rather see 75 $1 million loan guarantees going out to more companies.”

At this point, he said, “We should do everything we can to make them successful, and if that means renegotiating something, fine. … It’s done. It’s a done deal. Should it have been done? People can debate that for eons. It depends on what you think government should be doing in economic development.”

Asked Tuesday for an update, Governor Chafee told “Well, any company goes through different issues and right now I don’t have much to report.” Asked for his gut feeling about the company’s prospects, Chafee demurred, replying: “It’s too early to really say.” An EDC spokeswoman did not respond to a request for comment.

Robitaille also argued that deals like the 38 Studios loan guarantee wouldn’t be needed if Rhode Island had a better taxation and regulatory environment. “That’s the trap you fall into when you’re caught between trying to attract jobs to a state that already has an unfriendly environment for business – then you have to compensate for that by offering all these incentives,” he said.

At a WPRI 12 gubernatorial debate in October 2010, Robitaille lambasted the other three candidates for opposing the Schilling deal and accused them of showing businesses “a ‘keep out’ sign.” At the time the EDC and its bankers hadn’t closed on the $75 million bond transaction yet.

Former Treasurer Frank Caprio, the Democratic candidate for governor in 2010, reversed his support for the deal that summer, joining Chafee and the Moderate Party’s Ken Block in opposing it. “If 38 Studios unable to pay its debt how do the General Assembly leaders feel about paying about $12 million yearly for the next decade?” Caprio tweeted on Monday night.

Robitaille said it’s “way too early” for him to make a decision on whether he’ll run for governor again in 2014, though he will consider it. He said he’ll probably make a decision after the November election and would start raising money next spring if he decides to enter the race.

Legislative leaders increased the size of a proposed Job Creation Guaranty Fund from $50 million to $125 million in 2010 after Schilling began lobbying. Mass. Gov. Deval Patrick, whose aides turned down Schilling, told the Boston Herald on Tuesday: “I’m sorry for him and his employees, and I hope things work out.”

A WPRI 12 poll in September 2010 showed 54% of Rhode Island voters opposed the $75 million loan guarantee to 38 Studios, with just 28% in favor of the deal. “A clear majority of Rhode Islanders thought this was the wrong thing to do,” WPRI 12 political analyst Joe Fleming said Tuesday.

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Sean Daly and Tim White contributed to this report.

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