Rhode Island boasts plenty of beaches and the mansions of Newport, but its budget woes and repeated brushes with bankruptcy have been stealing all the headlines lately.
Within the past four years, the smallest city in the state went bankrupt, and the biggest one — the capital, no less — almost did. Rhode Island has been dogged by the highest or near-highest unemployment rate in the nation and has ranked dead last in a seemingly endless parade of national surveys of business-friendliness. In 2010, still in the throes of the recession, state leaders gambled away $75 million in a taxpayer-backed loan guarantee to a video-gaming venture founded by former Red Sox pitcher Curt Schilling, who had never turned a profit let alone run a business. Two years later, the business, 38 Studios, went bankrupt, sticking taxpayers with the bill.
38 Studios has become the bogeyman under the bed of every state incumbent. The attorney general is being lambasted for voting for the program that funded the deal when he was a state lawmaker. The secretary of state lost his primary for lieutenant governor after it was reported that proponents of the deal never registered as lobbyists. Debating whether the state should put payments on the business’s bonds in the budget — or risk a lower bond rating as many warn — has become an annual rite of politics in the state legislature.
In the local political lexicon, 38 Studios is shorthand for everything seemingly wrong with Rhode Island — political corruption, insider dealing, a swing-for-the-fences approach to economic development, corporate welfare, and wasteful spending.
Not surprisingly, the state’s collective self-esteem has taken a beating. Earlier this year, a Gallup poll found that just 18 percent of residents believed they lived in the “best or one of the best possible states” — the lowest level of any state surveyed. The editor of the alternative weekly the Providence Phoenix perhaps put it best last May: “It’s time for a pep talk, Rhode Island.”
Five months later, the Phoenix itself is going out of business.
The state’s malaise might help explain why this year’s GOP candidate for governor, Allan Fung, has a fighting chance of winning in a state that on the surface appears bluer than even neighboring Massachusetts. In 2012, Obama carried this state by 27 points, the second biggest margin in the Northeast. Today, just eleven GOP-held legislative seats are all that stand between Democrats and unanimity in the 113-member legislature. (Contrast Massachusetts, where the GOP has a larger share of state legislative seats: 33 out of 200, or 16.5 percent of the total, against 9.7 percent in Rhode Island.)
Yet polls show a tight race for governor. Earlier this month, a New York Times/CBS News/YouGov online poll pegged Fung at 38 percent against 41 percent for the Democratic nominee, state treasurer Gina Raimondo. That gap has widened somewhat with the entrance of a third-party candidate into the race. Fung now stands at 36 percent against Raimondo’s 42 percent, with the third-party contender, Robert Healey of the Moderate Party, at 8 percent, and 12 percent undecided, according to a WPRI 12/Providence Journal poll released October 15. RealClearPolitics ranks the race a toss-up.
Fung also has history on his side. From the state legislature to four congressional seats on Capitol Hill, Democrats may rule the roost in Rhode Island. But the exception to the rule is the governor’s office. Rhode Island has not elected a Democrat governor since 1992. The current governor, ex-Republican Lincoln Chafee, is a Democrat, but he won election in 2010 as an independent. Before that, Rhode Islanders had elected and reelected two Republican governors in a row.
Democrats have become victims of their own success, if success is judged by size. In 1994 and again in 2002, Democrats divided in the primaries, paving the way for GOP victories in the general elections. With the advantage of incumbency behind them, each of those GOP victors went on to win reelection four years later.
This year, the Democratic base splintered over the 2011 pension-reform law, which slashed benefits for current retirees and state workers in an effort to drop the state’s unfunded liabilities by $3 billion and save taxpayers $4 billion over two decades. Although Chafee and Democratic legislative leaders all signed on to the reform, Raimondo is viewed as its chief champion.
The labor movement divided over how to defeat her. Most public-employee unions went with Angel Taveras, the mayor of Providence. But Taveras was toxic to the two state teachers’ unions — his decision to fire all city teachers in the first year of his term, when the city was staring into the abyss of financial insolvency, remains a sore spot. The teachers instead opted for Clay Pell, a candidate known best as the grandson of legendary U.S. senator Claiborne Pell and husband of Olympic figure skater Michelle Kwan.
Raimondo burned through $4.8 million in the primary, nearly emptying her war chest. (Her opponents spent a combined $5.9 million.) At the start of this month, she had just $333,645 left, barely enough to even be competitive in a down-ballot race in this state. She’ll hit the fundraising circuit again, but Fung began October with three times as much in the bank ($911,863), a remarkable early advantage over an opponent with a reputation as a fundraising juggernaut.
The outcome also explains why Fung is winning union households by 42 percent to 30 percent, according to the WPRI/Providence Journal poll. Fung has done little to water down his fiscally conservative positions to earn this support: He supports right-to-work laws. He plans to cut spending — if necessary, cutting deeper into a state workforce that has already been whittled down by the last Republican governor — to pay for a $200 million tax-cut package that his campaign says would make Rhode Island one of the most competitive states for business in the region. This is no Lincoln Chafee Republican.
Oh, and that 2011 pension-reform law? Fung was all for that, too. (He actually thinks it didn’t go far enough.)
And Fung doesn’t even have to snip away at the Democratic base to win. There are more registered independents in Rhode Island than Democrats, a difference of 358,045 to 290,397 as of May 2013. (The GOP had just 74,070 members.) So far, the race is a dead heat among independents, with Raimondo drawing 36 percent and Fung 34 percent, leaving 19 percent undecided, according to the WPRI/Providence Journal poll.
Fung is also more likeable than Raimondo. That same poll put him ahead of her, 64 percent to 58 percent, in favorability ratings. The popularity gap is wider among independents, 71 percent to 49. Internal polling released by the campaign shows Fung is well-liked across the board, with approximately two-thirds or more of Republicans, Democrats, men, and union and non-union households all holding a favorable view of him.
Meanwhile, Fung’s record has none of the radioactivity that Raimondo’s does. Elected mayor of Cranston in 2008, he claims credit for eliminating a $1.5 million deficit in the city’s budget and somehow managing to move city employees into 401(k)-style pension plans without drawing a union fatwa. The unemployment rate in Cranston stood at 10.5 percent when he took office. Last month it had dropped to 7.6 percent. (During the same period, the statewide rate has declined from 9.7 percent to 7.6 percent.)
As for their positive policy proposals, Raimondo is touting her plans for improving the state’s transportation infrastructure and revitalizing its ailing manufacturing industry. Beyond the meat-and-potatoes of tax-and-spending cuts, Fung wants to boost tourism, noting that the state has been losing market share in the industry. (It’s on Raimondo’s radar screen too, but Fung has more to offer in the way of specifics.) Had the Ocean State stayed its pre-recession levels of visitor spending, tourism would have pumped $375 million more into the economy and $87 million worth of tax revenue into state coffers, along with thousands more jobs. As the stream of tourists has slowed to a trickle, so has state spending on marketing. The state currently spends $400,000 a year on it, less than the $500,000 it budgeted in 1977 and 1978 (that’s before adjusting for inflation), according to the Fung campaign.
If he’s elected, the country may soon be hearing more about those beaches and Newport mansions. They also might be hearing more about Allan Fung.
— Stephen Beale is a freelance writer based in Providence, R.I. Follow him on Twitter @bealenews.