Nesi’s Notes: May 15

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 me on Twitter and on Facebook.

1. Should Providence borrow the equivalent of an entire year’s city budget to shore up its pension system? That’s basically what Mayor Elorza is contemplating with his new proposal to have Rhode Island’s capital city float a $704 million pension obligation bond. The crater-sized hole in the pension fund — caused in no small part by Buddy Cianci’s disastrous 1991 consent decree — has now bedeviled three straight mayors. Each has made progress; none has solved the problem. A pension obligation bond is going to be a hard sell, with Woonsocket’s experience still fresh in their minds. As Tom Sgouros noted on Twitter, Providence would be exchanging a “soft” liability (promised pension benefits) for a hard one (bond payments). But between court decisions and other pressures, Elorza feels there is actually little wiggle room to rein in the yearly pension contribution, now at $93 million a year and set to rise by about 5% annually. His argument: borrowing that $704 million will put money back into the city budget, boost the pension system’s funded ratio, and offer the chance to earn more than the 4% interest on the bond by investing the cash in the markets. Elorza has just weeks before the end of session to convince General Assembly leaders of that, and Speaker Shekarchi for one was still waiting to be briefed as of Thursday. One wary observer is Treasurer Magaziner, who said Elorza called him two days ago to raise the idea. “I’d say we’ve got to be cautious here,” Magaziner said on this week’s Newsmakers. “It’s a strategy that’s viewed by many people as risky. It has a mixed track record. But I want to keep an open mind until I actually see the details of the plan.” Where Magaziner does agree with Elorza is on the seriousness of the issue. “The Providence pension is the biggest financial problem that the state of Rhode Island faces,” he said.

2. Kevin Hively, who was director of policy for Governor Almond and is now a consultant to communities nationwide, passes along two documents well worth reading if you want to get smart about the pros and cons of pension obligation bonds. The first is this October overview by San Jose finance officials to a retirement panel there; the second is this summary by the investment bank Raymond James. I’d add two solid articles from national news outlets, this 2018 Wall Street Journal piece on Chicago and this 2015 New York Times overview.

3. Providence’s biggest pension is still going to the same person it has for years: former Fire Chief Gil McLaughlin, who retired back in 1991 and is currently collecting about $197,000 a year from the city, according to records I obtained from the mayor’s office. McLaughlin, now 84, gets that money tax-free because he retired with an accidental-disability pension rather than a standard service pension. (At the other end of the spectrum, the smallest pension is just $473 a year.)

4. Seth Magaziner is part of the quartet of Democrats seen as all but certain to run for governor next year, along with Dan McKee, Nellie Gorbea and Jorge Elorza. Despite amassing a $1.3 million campaign war chest, Magaziner isn’t quite ready to say he’s running — but he’s getting close. “I expect to make a decision shortly,” Magaziner said on Newsmakers, just after delivering a stump-speech-ready riff about how his two immigrant grandfathers embodied the American Dream. Like Gorbea, Magaziner says the fact that he would now be primarying an incumbent governor rather than seeking an open seat has no bearing on his calculus. “My thought process is entirely about what can I do to help lift Rhode Islanders up, to restore that American Dream, and to build a real 21st-century economy in Rhode Island where there’s opportunity for everybody,” he said.

5. Something to keep in mind: if four (or more) credible candidates enter the Democratic gubernatorial primary and stay in through the end, you’re not going to need 50.1% of the vote to win — and you might need much less than that.

6. Dan McKee and his campaign advisers got a wake-up call last weekend about the challenges he could face as the perceived candidate of moderate and old-school Rhode Island Democrats at a time when the party is shifting to the left. Not too many years ago, having Jerry Zarrella co-host a fundraiser wouldn’t have raised eyebrows among most Democrats — Zarrella once hosted a fundraiser on Block Island for Bill Clinton, after all. But that was before Zarrella signed on as a co-chair of Donald Trump’s 2020 re-election campaign. While Zarrella urged Trump to concede once the election was called, his association with the former president is a dealbreaker for most Democrats — something McKee acknowledged when he issued a statement canceling the fundraiser and criticizing Zarrella. The Rhode Island GOP saw an opening to tweak the new Democrat in the corner office, saying in a statement, “McKee sounds like he is on the verge of adopting Hilary Clinton’s rhetoric from 2016 when she called many Trump supporters ‘deplorable.’” Still, keep the story in perspective: what most Rhode Island voters are going to remember about this week was McKee marking 1 million vaccine doses, lifting the mask mandate, and speeding up reopening.

7. Meet Rhode Island’s (likely) next U.S. attorney, Zachary Cunha (Brown ’98).

8. Former Fall River Mayor Jasiel Correia was convicted Friday on 21 criminal counts, so I asked our chief investigative reporter Tim White to answer some questions about what lies ahead for the 29-year-old. What will Correia’s punishment be? “That is ultimately up to U.S. District Judge Douglas Woodlock, who has sentenced many a defendant since he was appointed by President Reagan in 1986. But U.S. Probation and Pretrial Services will prepare a pre-sentence report giving the judge a guideline range for a potential sentence. Working in Correia’s favor: he has no prior criminal history. But other factors work against him, including the monetary value of the fraud and extortion charged. His fate is entirely in the hands of Woodlock, and while I make it a habit not to predict what a judge will do, I find it improbable that Correia will escape prison time.” What can Correia do until his Sept. 20 sentencing? “While the government didn’t ask for Correia to be detained pending sentencing, he was placed on electronic monitoring. The federal government generally uses two types: GPS and radio frequency. The latter sends an alert to a probation official if the device is tampered with or the defendant leaves a designated area (usually their house). The docket in Correia’s case shows he was outfitted with GPS. A boundary is also set with GPS, and a defendant usually can’t leave either their home or their community without permission — otherwise the feds are alerted, and a judge could order the defendant detained until sentencing if he finds the individual violated the conditions of his release. (Salt in the wound: Correia has to pay for the monitoring bracelet.) Correia’s attorney said he plans a “vigorous appeal” — what’s the likely strategy? “Often defense attorneys will appeal the instructions the judge gave the jury ahead of deliberations. Indeed, Correia’s lawyer – the experienced defense attorney Kevin Reddington – was sure to get his objections about the jury instructions on the record earlier this week, likely for that very reason. It is also common for a defense attorney to base an appeal on evidence that was shown to the jury, arguing the judge should have blocked certain exhibits as unfairly incriminating to the client.”

9. Rhode Islanders always knew Jack Reed’s prominence on Capitol Hill would soar once he became chairman of the Senate Armed Services Committee, and this week brought new evidence of that. Reed spoke at a virtual Ronald Reagan Institute event Tuesday to lay out his priorities for the first Pentagon budget he will shepherd through the Senate, emphasizing the need to deter China. He was also the subject of a piece by legendary Washington Post columnist George F. Will, who wrote of Reed, “Today he is the most important person concerning the nation’s increasingly imperiled security.” Will also contrasted the Defense Department matériel of Reed’s 82nd Airborne days with the high-tech tools he is scrutinizing today: “These make parachutes, and even the planes that Reed jumped from, seem as prehistoric as spears.”

10. Eye on Congress … David Cicilline is leading an effort to censure GOP lawmakers who have downplayed the Jan. 6 attack … Jim Langevin’s cybersecurity expertise has been much in demand since the Colonial Pipeline attack, just the sort of infrastructure-crippling event he’s been warning about for years … Sheldon Whitehouse and Lisa Murkowski advanced their BLUE GLOBE Act out of committee … Jake Auchincloss led a letter from moderate Democrats signaling opposition to Nancy Pelosi’s drug pricing billBill Keating pressed the president to appoint a special envoy to Northern Ireland.

11. Gina Raimondo has lured another one of her former staffers in Rhode Island down to Washington: Jeremy Licht has joined the U.S. Commerce Department as deputy general counsel for strategic initiatives. Licht had spent the past year as head of the Pandemic Recovery Office, working to track the massive flow of federal coronavirus dollars down to the penny. (Dotty Pascale, who was previously chief of the R.I. Office of Internal Audit, succeeded Licht in that position on April 5.)

12. Good news and bad news for Speaker Shekarchi and Senate President Ruggerio. The good news? They have $324 million more than expected to put together the state budget. The bad news? They have $324 million more than expected to put together the state budget. As one State House observer pointed out, when there’s no extra money around, you can answer all spending requests from members of your caucus the same way: “No.” Now they will face many more demands, especially since that figure doesn’t include any of the coming American Rescue Plan Act windfall. On the latter pot of money, though, Finance Committee Chairmen Marvin Abney and Ryan Pearson indicated this week they plan to push off any decisions about spending it until the second half of the year — and they made clear the General Assembly intends to drive the appropriation process. They have plenty of time: the money doesn’t have to be spent until Dec. 31, 2024.

13. Rhode Island suffers from a paucity of political polling, but two fresh surveys this week offered some new insight into voters’ thinking. The first was a poll by the great Joe Fleming for Bryant’s Hassenfeld Institute (led by Gary Sasse) to test how Rhode Islanders want to spend the American Rescue Plan money. Small businesses and schools are the fan favorites, though 48% of voters don’t trust elected officials to use the money wisely. Another poll was commissioned by an advocacy organization, always an important caveat but still worth a look — the coalition Let RI Vote surveyed Rhode Islanders to test their support for various election-related proposals. The most popular idea by far is in-person early voting, supported by 72% of voters, and “strongly supported” by a majority — even 43% of Republicans back the idea. A majority of voters polled also supported the other four ideas tested (same-day voter registration, no-excuse absentee voting, online absentee-ballot requests, permanent absentee-voter lists) but early in-person voting stood out as more broadly popular.

14. The latest on the Eleanor Slater Hospital saga: Tim White and Eli Sherman discovered a $226,000-a-year executive at the hospital dodged two layoffs in recent months, and Eli reported on Senate Oversight Chairman Lou DiPalma’s frustration with the “veil of secrecy” over key Slater documents.

15. Tolly Taylor flags a striking stat: the number of families using Rhode Island’s child care subsidy program plummeted 34% during the pandemic.

16. A tough week of headlines for Providence. First a top schools official handpicked by the city’s turnaround superintendent was arrested for alleged foot-rubbing, after facing similar accusations in Florida. Mayoral candidate Gonzalo Cuervo has already called for Superintendent Peters’ resignation, and the Senate Oversight Committee is holding a hastily scheduled hearing about the state schools takeover Monday. Then Thursday night saw the worst shooting incident in city history, with nine people injured, eight by gunshots. Police Col. Hugh Clements told reporters the violence “is about one thing, illegal guns” — an increasing problem in Providence in recent years.

17. With Vineyard Wind approved and Revolution Wind beginning environmental review, what’s next for the offshore wind industry in Southern New England? This week I tackled that topic in a one-on-one interview with White House national climate adviser Gina McCarthy — she says the Biden administration is becoming even more bullish about wind’s potential as time goes on.

18. “East Providence is proposing sweeping improvements to its current zoning regulations,” announces the city’s director of planning and economic development, Bill Fazioli, in the New England Real Estate Journal.

19. The PBS series Frontline is airing a program Tuesday night called “The Healthcare Divide,” which will include an examination of how Prospect Medical Holdings has managed its two Rhode Island facilities, Roger Williams Medical Center and Fatima Hospital. NPR correspondent Laura Sullivan hosts. It comes as AG Neronha and Prospect are still battling over the latter’s effort to sell ownership in the hospitals — no major developments in that dispute this week.

20. Derek Thompson examines the CDC’s checkered record on coronavirus guidance.

21. Morgan Housel on why the pandemic could turbocharge the economy of the 2020s.

22. The great Dan Barry on Pawtucket after the PawSox. And if you want to spend 90 minutes with Barry — who doesn’t? — check out this recent YouTube Q&A he taped with the wonderful Tracy Breton.

23. Set your DVRs: This week on NewsmakersTreasurer Magaziner. Watch Sunday at 5:30 a.m. on WPRI 12 or 10 a.m. on Fox Providence, or listen on the radio Sundays at 6 p.m. on WPRO. See you back here next Saturday morning.

Ted Nesi (tnesi@wpri.com) is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter, Facebook, LinkedIn and Instagram

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