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Nesi’s Notes: March 21

Ted Nesi
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Happy Saturday! Here’s another edition of my weekend column for WPRI.com – as always, send your takes, tips and trial balloons to tnesi@wpri.com and follow @tednesi on Twitter.

1. Usually when an economy falls into recession, there is a gradual weakening, which worsens over time. But what’s happening to the Rhode Island economy right now is more like a cardiac arrest. In the space of a week, every bar, restaurant and café has either closed or severely curtailed operations. Retailers are limiting their hours or shutting their doors. Providence’s biggest mall is closed for the moment; its biggest hotel is closed until June. Colleges have sent students packing two months early. Schools are undertaking an impromptu experiment in virtual learning, while many of us are working from home — often not as productively. The list goes on. The coronavirus crisis has become so all-consuming so fast it feels like it should disappear just as quickly, the way a hurricane or a blizzard does. But a pandemic isn’t a snowstorm. Goldman Sachs now expects the U.S. economy to shrink by a staggering 24% in the second quarter. (It only shrank 13% in the worst year of the Great Depression.) Here in Rhode Island, nearly 40,000 people have applied for out-of-work benefits in the last 10 days, an unprecedented number in such a short time. Hard as it is to believe, a back-of-the-envelope calculation suggests the state’s unemployment rate has already soared from 3% to 10% — again, in less than two weeks. Perhaps the economy is like an elastic band being pulled hard in one direction, ready to snap back just as hard. That’s the hope. The fear is that this level of damage is too severe to allow a quick recovery — and that it may take months to get the virus under control.

2. For Rhode Island, the coronavirus emergency is rapidly turning into a state budget nightmare, too. “The virus and the ensuing crisis have created significant challenges for the state’s finances, both short- and long-term, that we are still working to fully size and understand,” Treasurer Magaziner told me Friday night, after spending the week in round-the-clock discussions about the sudden cash crunch. This is always the time of year when the state’s liquidity is tightest, before the influx of income tax payments around April 15. Now those payments aren’t due until July 15, while other revenue sources like the sales tax are in steep decline, and expenses for things like disaster response and unemployment benefits are climbing. “If there is no action, then the state’s cash flow could become a challenge in weeks, not months,” Magaziner said. “We are acting. We are working very aggressively to find solutions to these problems, working with the governor and the legislature and the federal delegation. But that is why we are acting, because if we were to not act then those would be problems that would be coming relatively soon.” Magaziner says he’s focusing on three solutions: federal aid in the stimulus bill currently being negotiated; temporary transfers between various state accounts; and borrowing through either Tax Anticipation Notes (TANs) or direct loans from banks. “We will need action within a week or two, and so we hope to have specific recommendations in a matter of days,” he said.

3. While Treasurer Magaziner is focused on keeping enough cash on hand to pay the bills, Governor Raimondo and Assembly leaders are beginning to grapple with what the situation means for the current and upcoming state budgets. The outlook was already difficult: the tax-and-spending plan Raimondo released in January had to close a roughly $200 million projected shortfall, and legislative leaders have panned some of her proposed fixes, like legalizing marijuana. And all this is happening in an exceptionally unpredictable environment, while legislators and their staffs are being told to avoid Smith Hill. It’s undoubtedly the worst budget environment since the depths of the Great Recession. “We’re going to have to have a very hard look at our budget,” Raimondo said Friday. “At this point everything has to be on the table. Furloughs and layoffs are things that you want to avoid at all costs; they were considered in the last recession. It’s going to depend on a lot of factors. It will depend on how quickly we can get the economy going again, how robust the federal government’s stimulus is, and whether we’re able to reach out to the bond markets to help us with our short-term cash needs.”

4. One question Assembly leaders are currently contemplating: how do lawmakers vote on emergency spending or borrowing measures if they’re still supposed to be avoiding large gatherings such as, well, the General Assembly? Can they engage in remote debates and voting, as the Providence City Council did on Thursday night? Should they have reps and senators come vote in small groups alphabetically over a few hours? Is there a way to pass bills with just a few lawmakers in attendance, the way the U.S. Senate uses unanimous consent? Should measures be approved by the four members of the newly relevant Disaster Emergency Funding Board?

5. Governor Raimondo has won widespread praise for her handling of the pandemic, even in quarters that aren’t usually favorable to her, as The Globe’s Ed Fitzpatrick reported this week. Transparency has served her administration well: daily press briefings, regular data releases, and what so far appears to be an honest relating of the situation at hand. If there’s one decision Raimondo has made that’s opened her up to criticism, it’s her refusal to postpone Friday’s sales tax payment deadline for restaurants — the same restaurants she’s ordered mostly closed to fight the pandemic. The governor did offer the industry an olive branch Friday night, signing an executive order allowing them to offer beer and wine with takeout orders. And if you’re looking to support some local eateries, the team at The Rhode Show is maintaining a list of local establishments doing takeout and delivery, as is EatDrinkRI’s Dave Dadekian.

6. The governor’s left-hand man throughout this crisis has been Arkady Belozovsky — her American Sign Language interpreter at the daily briefings. Kim Kalunian shares his story here.

7. On Capitol Hill, meanwhile, Rhode Island has managed to be one of 19 states with a seat at the table as senators rush to hammer out a roughly $1 trillion stimulus bill, after U.S. Sen. Jack Reed was appointed to the task force late Thursday afternoon. He spent all day and into the evening Friday in negotiations over the legislation before the senators decided to break up and return to the issue Saturday. Reed’s office reports he and New York’s Chuck Schumer are leading discussions on creation of a State Stabilization Fund that would help states like theirs shore up their suddenly dicey budgets. He is also part of the conversations around expanded unemployment insurance, an issue he’s been active on for years. State leaders told me Friday they are counting on their senior senator’s clout to craft a bill that will help stabilize the situation in Rhode Island. Yet Reed was working to manage expectations on Friday, saying in a statement, “No one piece of legislation – even a trillion-dollar one – can undo all the damage or pull us out of this deep and unprecedented hole.”

8. The financial effects of the pandemic are, of course, products of the health effects. And as our Eli Sherman reported Friday, the inadequate supply of protective equipment remains a major concern for doctors and nurses. Eli has also been tracking the latest data on cases and self-quarantines, which you can find here.

9. Oh by the way, turns out there’s still a presidential election happening out there, too — and none of Rhode Island’s members of Congress have endorsed a candidate, even as Joe Biden seems to be pulling away from Bernie Sanders. During Friday’s taping of Newsmakers, Tim White pressed Congressman Cicilline about whether Sanders should drop out. “Look, I think that’s a really important decision for Senator Sanders to make,” Cicilline told Tim. “You know, being in a campaign, running for office — it’s hard for anyone to tell you what you to do. I think you’re right, though — it looks like the numbers are not there for sort of creating a path for him. I think the party is really beginning to coalesce around former Vice President Biden. But obviously Bernie Sanders has brought a lot of energy and some really important issues to the debate, and I respect that tremendously and I think he’ll make a judgment about what is kind of the right course of action for him and his supporters in due time.” Asked why he hasn’t endorsed yet, Cicilline said he’s been focused on the coronavirus situation. “I mean, I have a longstanding personal friendship with the Bidens, so I’m a huge fan of the vice president; I obviously have a lot of respect for Senator Sanders,” he said. “But again I think it’s not been the focus on what I’ve sort of been paying attention to for the last few weeks.”

10. Here’s a dispatch from my Target 12 colleague Steph Machado: “On Monday, Rhode Island public schools will embark on an ambitious experiment: virtual learning in all 64 school districts and public charters for the foreseeable future. What was originally thought of as a potential temporary fix for a snow day or two (but never actually tried by any of them) is now a potentially long-term solution for a disease outbreak with no clear end in sight. For now, the experiment is lasting two weeks, with a promise to reevaluate — and potentially make changes — by April 3. Schools have started sending out schedules that include taking attendance in the morning (so no sleeping until noon), and many teachers are getting creative and inventive in their lesson planning. After tracking the plans, I’ll be watching for how the technology works out as tens of thousands of kids log on to virtual servers and cram more devices onto the home WiFi with their working-from-home parents. And I’ll be keeping an eye on how districts are serving vulnerable populations of students — including English learners and students with disabilities — many of whom have IEPs that must be complied with by federal law. Commissioner Angélica Infante-Green was both optimistic and realistic when I spoke to her on Friday afternoon, acknowledging that physical therapy and other specialized services will be difficult to provide remotely. ‘It’s hard,’ she said. ‘We’re going to try and be as creative as possible, and we’re going to be as supportive as possible.’ She also made a plea for donations as some districts are still working to get Chromebooks and WiFi hotspots to low-income families. ‘There are going to be bumps in the road,’ she added. ‘This is not a perfect solution.'”

11. History can be a comfort and a guide in stressful times. To give you some perspective, I recommend Jeremy Brown in The Atlantic on how this does and doesn’t compare with the 1918 Spanish flu, Isaac Chotiner’s New Yorker interview with historian Sir Richard Evans, and our own Steve Frias in the Cranston Herald on how Rhode Island handled the 1918 pandemic. As for me, I’ve been telling people this reminds me of what I’ve read about the mobilization after Pearl Harbor.

12. Common Cause’s John Marion is hoping Rhode Islanders use this time at home to complete the 2020 Census, and so far he seems to be having some success. “The Census Bureau is providing weekly updates of the response rate by state and city,” Marion reports. “So far Rhode Island leads New England and is in the top 10 in the nation. But if you dig deeper you’ll see that some Census tracts on the East Side of Providence are over 30% while others in Providence are below 10%, so we’ve got a big challenge in getting out the count.”

13. My old PBN colleague Justin Sayles has a great Ringer article on how Boston sports radio reacted to Tom Brady’s departure.

14. Golf Digest’s Joel Beall relates the strange tale of Brad Faxon, the Metacomet Country Club, and a rescue plan that wound up as a lawsuit.

15. Did you know Thomas Jefferson brought us mac ‘n’ cheese?

16. Your moment of zen:

17. Set your DVRs: This week on NewsmakersCongressman Cicilline. Watch Sunday at 10 a.m. on Fox Providence. Podcast lovers, you can subscribe to both our weekend shows on iTunes — get the Newsmakers podcast here and the Executive Suite podcast here — and radio listeners can catch them back-to-back Sundays at 6 p.m. on WPRO-AM 630 and WEAN-FM 99.7. See you back here next Saturday morning.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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