NEW: Few RI Lawmakers Voted Against Deal that Paved Way for 38 Studios

Wednesday, May 16, 2012

Dan McGowan, GoLocal News Editor

Only a month after the General Assembly overwhelmingly voted to expand the Job Creation Guaranty Program from $50 million to $125 million in 2010, the Economic Development Corporation (EDC) awarded 60 percent of the available funds to former Red Sox star Curt Schilling’s video game company, a deal some lawmakers now claim they were blindsided by.

At the urging of EDC executive director Keith Stokes, the legislature agreed to more-than double the size of the fund as part of its supplemental budget that year, and only six members of the House of Representatives voted against the expansion.

The nay votes were cast by Reps. Rod Driver, Larry Ehrhardt, Robert Jacquard, Charlene Lima, Brian Newberry and Bob Watson.

“I was up on the floor against it, I just smelled something funny at the time,” Rep. Lima said Tuesday. “We were totally blindsided in the first place. We didn’t have all the information before we voted for it. Now look what happened. I’m just so appalled.”

House Speaker Gordon Fox acknowledged Tuesday that Schilling’s 38 Studios failed to make a $1.125 million payment to EDC on May 1 and now the EDC board plans to hold an emergency meeting this morning to address “an unexpected occurrence that requires immediate action to protect the public regarding the 38 Studios, LCC financing.”

The EDC is expected to discuss options for keeping the doors open at 38 Studios, which Fox said could include offering tax credits. In 2010, GoLocalProv reported that Schilling’s company could be eligible for tax breaks, but Schilling repeatedly denied that he was interested in pursuing any such deal.

Governor Chafee on Tuesday again offered few details as to what the EDC will do to help Schilling’s company, saying, “We’ll do everything possible to help them stay financially strong and that’s no different from any other company.”

At the time, Chafee and Gubernatorial candidates Frank Caprio and Ken Block were against the decision to offer the $75 million loan guarantee to Schilling’s company. Chafee even threatened to sue Governor Carcieri if the company went belly up.

According to Minority Leader Brian Newberry, lawmakers were not aware that expanding the Job Creation Guaranty Program would result in the majority of the funds being awarded to one company. If that had been made, he said, more probably would have voted against the plan.

“I voted against the expansion of the Job Creation Guaranty Program at the time precisely because I didn’t know where the money was going and I’m always suspicious of any government’s ability to try and pick winners and losers,” Newberry said. “I would imagine many of my colleagues who voted for the program would have voted differently if they had known [where the money was going.]”

Lima said she was furious to learn that 38 Studios was struggling financially. She said too many lawmakers voted without having all the pertinent information. Lima said she will call for those who pushed for the 38 Studios deal to be held accountable.

“Anytime they don’t give you all the information, watch out,” Lima said. “We could have given smaller loans to smaller businesses.”