2. Four months after Governor Chafee proposed his budget for the fiscal year that starts July 1, a roughly $70 million shortfall has opened up in his tax-and-spending plan. The culprits include soaring Medicaid enrollment, weak tax revenue, unbudgeted union raises, and $4.6 million for HealthSource RI. Richard Licht, the governor’s right-hand man, says the administration is “looking at lots of options” to close the gap. “We have a $70 million problem – we will solve it, working cooperatively with the General Assembly,” Licht said on this week’s Newsmakers. “I wish we had $70 million to spend; unfortunately, we have $70 million to cut, and we will.” Of course, that $70 million shortfall doesn’t account for the cost of the General Assembly’s own priorities – notably tax cuts and nixing the Sakonnet tolls. A two-step on the corporate tax – dropping the rate to 7% while switching to combined reporting – has momentum and is apparently revenue neutral, so its passage is highly likely. Another Speaker Mattiello priority – restructuring the estate tax to eliminate the “cliff” at $921,655 – will be more challenging but could still find its way into the final document. A solution on tolls remains uncertain. The budget machinations are all taking place against the backdrop of an election year, which has lawmakers hoping to finish the session early without making anybody too mad – especially before the June 25 filing deadline for candidates.
3. If the Chafee administration has had an indispensable man, it’s probably been Richard Licht. He was one of Chafee’s first appointees and has remained one of the governor’s most trusted advisers while others came and went. He’s also a workaholic political survivor with a huge Rolodex, and very much a center of power in his own right. Licht’s looming departure, presuming the Senate approves his nomination as a judge, is a vivid sign that Chafee’s four-year tenure is drawing to a close. Of course Chafee still has seven months to go, and someone has to lead the Department of Administration; through a spokeswoman, the governor told me it’s still “a little too early” to say who will replace Licht.
4. Somewhat surprisingly, Republican Allan Fung will be the first gubernatorial candidate to go on TV – his ad will start airing next week. And sources say Gina Raimondo will go up on TV next week, too. While Fung has just $445,000 available to spend, Raimondo has $3.4 million.
5. Speaking of campaigns, Common Cause Rhode Island’s John Marion passes along this People for the American Way analysis that suggests big donors will now be able to donate up to $118,000 to Rhode Island candidates each year – a nearly 12-fold increase over the current $10,000 limit – in the wake of the recent U.S. Supreme Court McCutcheon decision. Of course, that’s just what they could contribute – it’s still unclear how many donors active in Rhode Island actually want to shell out that much cash to candidates. But it’s worth keeping an eye on the actual impact of the change.
6. So much for the House Oversight Committee issuing subpoenas on 38 Studios under its new chairwoman, Rep. Karen MacBeth. In a statement Friday afternoon, Mattiello confirmed he is opposed to having MacBeth take that step – and since the speaker has to OK issuing subpoenas, that’s the ballgame. Mattiello noted that MacBeth has asked various figures to testify voluntarily, and they’ve refused. “Issuing subpoenas at this point would be fruitless because the same people would continue to decline to offer testimony,” he said, describing the House as “a legislative body, not an investigative body.” Coming fast on the heels of Mattiello’s Thursday announcement that he now supports paying the 38 Studios bonds, it’s clear the new speaker isn’t being swayed by the vocal 38 Studios warriors who backed him over Michael Marcello, whom MacBeth had criticized just last year for failing to issue subpoenas when he had the Oversight gavel.
7. John Henry is selling the Worcester Telegram & Gazette to Halifax Media Group, a Florida company formed just a few years ago. The T&G’s reporter noted this was Halifax’s “first purchase in the Northeast.” It would be interesting to know if Halifax is (or was) also considering a bid for The Providence Journal; a spokeswoman did not respond to an email asking the question. Halifax’s major investors include a firm led by Arkansas billionaire Warren Stephens, who is also CEO of Stephens Inc. – the investment bank that is currently shopping The Journal for A.H. Belo. This week a Gannett spokesman also declined to comment on whether the company wants to buy The Journal, though it seems unlikely considering the company is refocusing on broadcasting now. Another possible bidder, GateHouse Media, didn’t respond to a request for comment on its own interest in the paper.
8. Who knew? Miles Davis recorded a cover of Cindy Lauper’s “Time After Time.”
9. Rhode Island’s 38 Studios saga got a shout-out from Josh Barro this week in a New York Times Upshot piece about how politicians use debt and pensions to skirt balanced-budget requirements. “This is a good example of how paying in promises instead of in cash can get lawmakers in trouble,” Barro writes. “The 38 Studios deal would have probably looked less appealing to Rhode Island legislators had they needed to put up cash upfront to get someone else to take on the risk of a 38 Studios failure.” On a related point, this 1996 R.I. Supreme Court decision by former Justice Bob Flanders makes some interesting points about the legality of state debt that voters never approved.
10. Politico’s Burgess Everett reports that Jack Reed’s months-long effort to restore extended unemployment benefits is on life support, despite the continued efforts of both him and his Republican partner, Nevada’s Dean Heller. Yet Everett isn’t burying their attempts quite yet, writing: “Despite the obstacles, no one is counting out Heller and Reed, whose states’ inordinately high jobless rates have kept them singularly focused for five months on reviving unemployment benefits.” Meantime Ben Casselman, writing at the new FiveThirtyEight, reports that cutting off benefits hasn’t actually pushed people into jobs as some had argued it would.
11. I joined Rhode Island PBS for this weekend’s edition of “A Lively Experiment,” along with Steve Klamkin, Wendy Schiller and Maureen Moakley. Watch tonight at 7 p.m. on WSBE Learn (Ch. 36.2), Sunday at noon on WSBE-TV (Ch. 36.1) or online at the RI PBS blog.
12. Here’s a roundup of the latest Campaign 2014 endorsements we’ve received: Republican National Committeeman Steven Frias and Committeewoman Carol Mumford, as well as the Rhode Island Young Republicans, all endorsed Allan Fung … the Coventry and Westerly Democratic Town Committees endorsed Ralph Mollis … the Burrillville Democratic Town Committee endorsed Guillaume De Ramel and Seth Magaziner … and the Exeter Democratic Town Committee endorsed Seth Magaziner.
13. If you missed them the first time around, now’s your chance to check out some of the other items we published this week: HealthSource RI needs an unexpected $4.6 million from the state … former Speaker Bill Murphy confirmed he visited 38 Studios back in 2009 … Gordon Fox’s lawyer kept fighting Fox’s 38 Studios subpoena … a 38 Studios insiders urged his colleagues not to disclose its under-capitalization … a judge reprimanded lawyers for their 38 Studios disclosures … SEIU Local 580 voted down a new state contract … Mike Solomon said he won’t serve on the PEDP board if elected mayor … and a Providence city employee is buying up Buddy Cianci websites.
14. Set your DVRs: This week on Newsmakers – Richard Licht, director of the R.I. Department of Administration and Superior Court judge nominee. Watch Sunday at 10 a.m. on Fox Providence. This week on Executive Suite – Andera CEO Charlie Kroll. Watch Saturday at 10:30 p.m. or Sunday at 6 p.m. on myRITV (or Sunday at 6 a.m. on Fox). See you back here next Saturday morning.