By DAVID PEPIN
While some Rhode Islanders are panicking about the state’s budget and pension crises, Gov. Lincoln Chafee is hoping to win over the business community with a calm, I’ve-seen-this-before approach.
Even as he acknowledged the problems his administration faces, he projected reassurance and optimism to an audience of about 30 local businesspeople and town officials Friday afternoon at an East Greenwich Chamber of Commerce-sponsored talk at the East Greenwich Yacht Club.
Likening the current situation to the budget problems and long-running teacher contract problems upon taking office at mayor of Warwick in 1993, Chafee outlined his response.
“(Then-Gov.) Bruce Sundlun was turning off the lights on the freeways, and I stepped into one of the worst teacher contract disputes in the history of Rhode Island as Warwick’s first mayor in 32 years. We methodically went to work resolving the teacher dispute, put in good budgets and made service affordable, and in 1994 won every ward,” Chafee said.
Hinting at good economic news, revealed Monday as a $119 million upward projection of state tax revenues that cut nearly a third of the projected state deficit, Chafee defended the combination of spending cuts and broadening of sales taxes that so far has received a cold reception from the General Assembly and drawn stiff opposition from businesspeople and political rivals.
He took particular heart in a speech Federal Reserve Chairman Ben Bernancke gave at a National Governors Association conference.
“He told us, ‘You governors would be smarter to get your sales tax deeper into more items to broaden your revenue streams.’ My budget was at the printer doing exactly that,” Chafee said.
Another issue where the governor finds himself clashing with town councils and school committees is binding arbitration on teacher contracts. Bills permitting binding arbitration are winding their way through House and Senate committees despite nearly unanimous opposition from local elected officials who fear negative consequences to municipal budgets.
The problem, Chafee said, isn’t necessarily arbitration itself, but who is administering it.
“You want to be careful about demonizing something that needs reform but doesn’t need the whole apple cart tipped over,” he said. “The key is, who are the arbitrators? If they do it the right way, we can support it.”
Chafee suggested hybrid pensions, half defined contributions and half 401(k)s, may be the way to the state to attack the underfunded pension crisis, and is continuing discussions with General Treasurer Gina Raimondo on solutions that would not involve selling state assets.
“(Pension consultants) say ‘Sell an asset,’ and I don’t like to sell,” he said.
During last year’s gubernatorial campaign, Chafee sharply criticized the state Economic Development Corporation’s decision to commit $75 million of its $125 million loan guarantee fund to 38 Studios, the video game company former major league pitcher Curt Schilling brought to Providence from Massachusetts, but considers Schilling a teammate now.
“I don’t like throwing $75 million at one company, but the deal’s under way, and we’re going to be fully supportive,” Chafee said.
EDC Executive Director Keith Stokes, who accompanied Chafee Friday and also to the recent opening of the new Yardney high-tech battery plant on South County Trail, said creativity, through financial flexibility and accelerated permitting processes, is the key to filling up several vacant properties in the area, including Stanley Bostitch, scheduled to close next year.
“The question with large-scale buildings is, can we take a building that size and break it down into several small areas?” Stokes said, adding that discussions are ongoing with several manufacturing firms about Bostitch and other local properties.