04/02/2014
Vocal opponent of repaying 38 Studios bond now chairs House Oversight Committee
April 01, 2014 11:20 PM
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Kris Craig/The Providence Journal
Rep. Karen L. MacBeth, D-Cumberland, shown in the House chamber in June 2013, will chair the House Oversight Committee. She is one of the most vocal opponents of having Rhode Island taxpayers repay the private investors who bought the bonds that financed Curt Schilling’s doomed 38 Studios.
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K. JOSEPH SHEKARCHI
PROVIDENCE, R.I. — One of the most vocal opponents of having Rhode Island taxpayers repay the private investors who bought the high-yield, state-backed bonds that financed Curt Schilling’s doomed 38 Studios now chairs the House Oversight Committee.
On Tuesday, House Speaker Nicholas A. Mattiello elevated Rep. Karen MacBeth, D-Cumberland, to the chairmanship of the committee previously chaired by Rep. Michael Marcello, D-Scituate.
Marcello was Mattiello’s opponent in last week’s fast-moving fight for control of the House, following the abrupt resignation of former Speaker Gordon D. Fox after a March 21 raid of Fox’s home and State House office by state police and federal investigators.
Among MacBeth’s first pledges: subpoenas, if necessary, to wrest testimony from past and present lawmakers who had a role in the 38 Studios debacle, including Fox, who resigned as speaker last week, but still represents Providence House District 4.
On Tuesday, Mattiello also announced another shift, with Rep. K. Joseph Shekarchi, D-Warwick, replacing Rep. Anastasia Williams, D-Providence, as head of the House Labor Committee.
In an interview, MacBeth promised to “do everything that I can … to get everything out on 38 Studios. That’s, I think, a major priority for everybody.”
By day, MacBeth, 46, is the principal of Harris Elementary School in Woonsocket. She was previously a teacher and, for a time, supervisor of elementary student services in Woonsocket schools.
As a lawmaker, she introduced a bill earlier this year to prohibit any payments to the private investors who bought the state-guaranteed bonds that financed Schilling’s now-bankrupt video-game company.
The debate centers on repayment of the $75-million initial borrowing and $37.6 million in interest over 10 years for a total due the bondholders of $112.6 million. Excluding the amounts covered by reserve funds, state taxpayers owe $89.2 million on Schilling’s defaulted, state-backed loan.
The first $2.5-million payment is due in May. Governor Chafee’s proposed budget for the fiscal year that begins on July 1 includes enough money — above and beyond the dollars remaining in reserve — to make the next $12.5-million payment.
Chafee has taken the position that a default on this “moral obligation bond” would harm the state’s financial reputation and increase borrowing costs.
Lawmakers went along last year, but the House debate over the first taxpayer payment ended amid accusations of lies, fraud and political manipulation.
During this late June 2013 debate, MacBeth recalled where she was standing in 2010, asking House leaders questions on the chamber floor about the “job creation loan-guaranty” program up for a vote that day, with no mention of 38 Studios.
“We were lied to. All of us that were serving at that time,” MacBeth insisted. “They already knew 38 Studios was coming. And now here we are paying the consequences of it on the backs of taxpayers. It is wrong.”
In September, MacBeth crossed swords with Marcello over the need for subpoenas to wrest more information from key players in the 38 Studios deal and the state’s Economic Development Corporation — which has since been renamed.
As reported at the time by Rhode Island public radio, MacBeth pointed to redactions in documents obtained from the state EDC as a reason subpoenas were needed.
But then-Oversight Chairman Marcello said the committee had gotten “thousands of documents, pages of documents, already without issuing a subpoena. I believe that she [MacBeth] is misinformed in that she thinks somehow a subpoena is magically going to turn up documents that we didn’t get.”
On Tuesday, Mattiello questioned whether subpoenas would be needed if a court, after an April 11 hearing, unseals depositions in the lawsuit the state filed to try to recoup its losses.
But MacBeth said: “I’ve always said I want to issue subpoenas and that doesn’t change. … The speaker is aware of that.”
MacBeth said the committee as a whole will decide who to subpoena, but she would like to question Fox and the sponsors of the loan-guarantee bill, including former Rep. Jon Brien and then-House Finance Committee Chairman Steven Costantino, now a top-ranked official in Governor Chafee’s administration.
“This isn’t about a witch-hunt,” she said. “This is about just getting people that can give the answers that we need for the state. … What happened? Who knew about it? When did they know about it? Did they know about it before we voted on the bill? Did they realize and know it was in trouble?”
MacBeth was first elected to represent District 52 in Cumberland in November 2008. She was a member of the Cumberland School Committee from 2006 to 2008.
(Mattiello named another frequent critic of Fox’s leadership style — Rep. Spencer Dickinson, D-South Kingstown — a vice chairman of the oversight committee.)
Freshman Representative Shekarchi was first elected to represent District 23 in Warwick in November 2012.
He previously campaigned for and served as city solicitor for former Warwick Mayor Charles Donovan, and then as 2010 campaign manager for current state General Treasurer Gina Raimondo.
A lawyer, he has been the legal counsel to the Warwick Housing Authority for 15 years. He is also a former chairman of the Rhode Island Auto Dealers Hearing Board, and a former member of the Rhode Island Judicial Tenure and Discipline Board and the Coastal Resource Management Council.
As a lawmaker, he has focused his attention on legislation he sponsored — called the “Rhode Island New Qualified Jobs Incentive Act” — to make tax incentives available to companies that hire new “qualified” full-time employees who work a minimum of 30 hours per week, with a salary that is at least 250 percent of the state’s hourly minimum wage.
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