House Leadership Scrambles for Budget Vote on 38 Studios Provision
Monday, June 24, 2013
Members of the House Leadership were scrambling over the weekend, making one-on-one calls to legislators trying to secure support for the budget which is scheduled to come before the full House of Representatives on Tuesday.
The most controversial provision in the budget is the payment for the 38 Studios bonds -- and it appears that many House members are now reluctant to have to vote yet again for Speaker Gordon Fox' 38 Studios. "I think some Reps might be saying, "We don't want to do this, don't ask us to do this," to leadership. There's very much a concern as to how it will look for their next election," Representative Spencer Dickinson told GoLocalProv Sunday night.
According to a number of Representatives, House Majority Whip Stephen Ucci and Deputy Majority Whip Chris Blazejewski were making calls to Representatives who they saw as undecided on the budget. The budget includes a $2.5 million payment for the interest on the 38 Studios bonds.
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As GoLocalProv reported last week, Rhode Island had previously defaulted on moral obligation loans:
State officials have warned of potentially dire consequences if Rhode Island becomes the first state in modern memory to deliberately default on moral obligation debt—except that Rhode Island has done so before, as recently as 2006, GoLocalProv has learned.
“The issue of the state of Rhode Island having one of its quasi-public agencies issue bonds and [those] bonds running into a problem and not being fully repaid has happened in the past,” former state treasurer Frank Caprio said in an interview yesterday.
"I don't think we'd technically be in default if the budget gets recommitted and a new budget emerges with the money for 38 Studios not in there. There's enough in the reserve fund to cover the first payment due in November, but not next May. However, it does send a signal, and it's one I think we want to send. We need to hear from Assured Guaranty, since they'd come in and start investigating," said Dickinson.
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