PROVIDENCE, R.I. (WPRI) – Legislative leaders unveiled a state budget proposal late Thursday night that would send $33 million more to school districts and raise some taxes but would not increase the restaurant tax as proposed by Governor Chafee.
Update: Lots of random trivia about the budget on my Twitter feed. Which boards and commissions will keep paying their members? Who will be the new Chancellor of Education? Will Central Falls’ pension system get moved to MERS? Find out here.
An interesting feature on our doppler this afternoon that I wanted to share with you. Notice the thin green line across southeastern Mass. on the radar below. That is not a line of of showers, but rather a shift in the wind direction caused by a sea breeze coming in from east coastal Massachusetts. These sea breezes can act like mini cold fronts and sometimes can set off a shower or thunderstorm. Not the case Today since the air was too dry. Our doppler, with its very high 1km resolution, can pick up on these very small scale, but important weather features….Tony Petrarca
PROVIDENCE, R.I. (WPRI) – Governor Chafee on Thursday nominated three new board members to the R.I. Economic Development Corporation and ordered an independent outside review of the agency after a $75 million loan guarantee to 38 Studios blew up in its face.
The New York Times has a fascinating article today about the growing trend of American college graduates clustering together in a small number of metropolitan areas, leaving the rest of the country behind:
The winners are metro areas like Raleigh, N.C., San Francisco and Stamford, Conn., where more than 40 percent of the adult residents have college degrees. The Raleigh area has a booming technology sector and several major research universities; San Francisco has been a magnet for college graduates for decades; and metropolitan Stamford draws highly educated workers from white-collar professions in New York like finance.
Metro areas like Bakersfield, Calif., Lakeland, Fla., and Youngstown, Ohio, where less than a fifth of the adult residents have college degrees, are being left behind. The divide shows signs of widening as college graduates gravitate to places with many other college graduates and the atmosphere that creates.
That, of course, is a problem to the extent that higher educational attainment is correlated with improved economic prospects. “This is one of the most important developments in the recent economic history of this country,” economist Enrico Moretti tells The Times.
So how does Providence’s situation look? Comme ci, comme ça.
As I reported this morning, one in three homeowners in Rhode Island’s two largest counties are still underwater on their mortgages. It’s also interesting to note that housing prices have soared more quickly here than nationwide.
Take a look at this chart from the St. Louis Fed’s invaluable FRED database, which compares the growth in house prices since 1975 for both the U.S. (red) and Rhode Island (blue) :
Looks like a bubble! But is it?
Here’s the same chart with the addition of the home price index for Massachusetts (green):
I’ve been hearing a lot of complaints about the pollen in the last 2 weeks… and, guess what, it is warranted!! Conditions here in southern New England are some of the worst in the country this week as oak, birch and grasses are producing pollen at a steady pace. Here’s the pollen forecast for the next few days.
Pollen Counts
Weather, of course, plays a roll in the amount of allergens in the air. While rainfall can cleanse the air… the relief doesn’t usually last long as the rain promotes more plant growth and thus more allergen release. A windy day is also good at stirring up allergens. Mowing the lawn can stir up allergens. For people who suffer from allergies, the best advice is to stay inside on high allergen days and invest in an air purifier.
The housing crash is still being felt across Rhode Island.
More than one out of every three homeowners in Providence County – 37% of all borrowers – are still underwater, meaning they owe more on their mortgages than their properties are worth, according to first-quarter data compiled by Zillow. That puts it among the worst 20% of all U.S. counties.
The situation isn’t much better in Kent County, which includes Warwick, where 34% of homeowners are underwater. Negative equity is much less prevalent in the southern part of the state, with underwater rates of 17% in Newport and Washington counties and 15% in Bristol County.
Three-fourths of Rhode Island residents live in Providence and Kent counties, and they’re caught in a regional phenomenon; at least 30% of mortgages underwater across a broad swath of Central Massachusetts, Northeast Connecticut and the northern half of Rhode Island, according to Zillow.
Housing prices in Rhode Island dropped 24% between the second quarter of 2006 and the first quarter of this year after soaring 151% from 1997 to 2006, according to the Federal Housing Finance Agency’s index.
What is the dew point?? It is a direct measurement of how much water vapor is in the atmosphere. The higher the number, the more moisture is floating around. Dews in the mid 60s to low 70s indicates a very humid, sultry airmass. Notice the dew points on the map below. Take note of the much lower numbers in Upstate New York. That is drier air that is headed our way for Thursday. Low dew points and lots of sun will make for a very nice Thursday….Tony Petrarca
PROVIDENCE, R.I. (WPRI) – Providence Mayor Angel Taveras has struck a landmark deal with city workers and retirees to scale back future pensions, freeze cost-of-living adjustments and restructure health benefits that could save the capital from bankruptcy, WPRI.com has learned.
The average Rhode Islander would probably say 38 Studios has been lobbying Rhode Island political leaders, in light of multiple confirmed meetings and the company’s success in getting a $75 million taxpayer-guaranteed loan.
Secretary of State A. Ralph Mollis, however, takes a different view. His office says the company is under no legal obligation to register as an organization with business before the government.
“State law defines lobbying as influencing action on legislation by the General Assembly or the governor or on policy-making by the executive branch,” Mollis spokesman Chris Barnett told WPRI.com. “We have received no evidence or allegations of any such activities by 38 Studios that would trigger the requirement to register.”
38 Studios apparently agrees. The company has never registered anyone to lobby at the Rhode Island State House, even though Carcieri and Chafee administration officials, as well as House Speaker Gordon Fox, have all acknowledged meeting with Curt Schilling and other company representatives to discuss its plans.
Providence’s libraries are once again pleading with patrons to come to the rescue.
The Providence City Council is considering a 10% cut in the city’s annual appropriation to the Providence Community Library, the nonprofit that took over management of the nine branches in 2009. The library says the $355,000 reduction could force the libraries to shut their doors for nine weeks in 2012-13.
The proposed budget cuts “will have serious and detrimental consequences,” PCL’s leaders wrote in a message to councilors. “Any reduction to the already bare bones budget will result in reduced services to your constituents.” Mayor Angel Taveras says he’s cutting services to keep the capital out of bankruptcy.
Library leaders are asking patrons to call their City Council members ahead of a Finance Committee meeting Thursday at 6 p.m. and ask them to restore the funding. The library gets the majority of its annual operating budget from city taxpayers, with fundraising and other sources covering the remainder.
An approaching cold front today is sparking some scattered showers and sprinkles in our area this morning. Even though the same front brought a severe weather outbreak to our northwest yesterday, a repeat is NOT EXPECTED today. Check out some of the stats from yesterday’s storms—4.87″ of rain in Keene, NH and multiple reports of damaging winds, large hail and flash flooding. Here’s a map of the storm reports from the last 24 hours.
24hr Storm Reports
The front is running into more stable ocean air as it moves towards the coast today… with just scattered rain showers through about mid-day. The air will remain muggy and unseasonably warm today… as skies brighten in the afternoon and evening, high temperatures will climb to 78-82.
This Afternoon
Behind the front will come 1st—drier air, followed by 2nd–cooler air. Dewpoints (measuring moisture in the atmosphere) will go from the 60s today to near 50 tomorrow and into the 40s on Friday. The temperatures will still be into the 80s tomorrow, but then only in the 70s for Friday into the upcoming weekend.
Brendan Doherty isn’t interested in signing conservative lobbyist Grover Norquist’s famous anti-tax pledge, which has long been a rite of passage for most major Republican politicians.
“Brendan has not signed the ATR pledge and has no plans to sign it,” Doherty spokesman Robert Coupe told WPRI.com, using the acronym for Norquist’s group, Americans for Tax Reform.
Norquist – who once said he wants to “shrink [government] down to the size where we can drown it in a bathtub” – created the Taxpayer Protection Pledge in 1986 with the backing of President Reagan. “Signing it has become de riguer for GOP candidates running for federal or statewide offices,” The Hill later wrote.
Doherty now joins a growing group of Republicans who say they don’t want to be tied down by a pledge to never vote for an increase in federal revenue. At least a third of the GOP’s top candidates this year aren’t planning to sign the pledge, The Washington Post reported last week.
“The premise behind this and similar pledges that seek to tie the hands of candidates and elected officials tends to result in greater division and increased gridlock in Congress, at a time when we need to seek consensus and common-sense solutions,” Coupe said.
“Brendan has called repeatedly for comprehensive tax reform to simplify the tax code, close loopholes and create a tax plan that treats middle class families fairly and allows small businesses to compete and create jobs,” he continued. “That is Brendan’s commitment to the citizens of Rhode Island and his pledge is to provide the real leadership that is needed in Congress right now.”
A line of weakening thunderstorms will approach Northwest RI next 1-2 hours….cooler air off the ocean…especially central and southern suburbs will help to diminish any severe threat. Thunderstorms need (among many other things), very warm air in the low levels of the atmosphere. With the cool ocean air taking over..these orange and red colors on the radar will start to diminish…still some “rumbles” possible northern suburbs….Tony Petrarca
Severe thunderstorm watch thru early evening for areas shaded in yellow… Storm are expected to weaken as they approach our area Tonight…not all locations will get one…the highest chances would be north of Providence….especially along and north of Mass Pike. Northern RI has a slight chance of stronger thunderstorm after 8pm…I will keep everyone updated during the evening if necessary….Tony Petrarca
PROVIDENCE, R.I. (WPRI) – Governor Chafee sparred with Curt Schilling over his handling of the 38 Studios crisis on Tuesday as another one of the R.I. Economic Development Corporation’s board members resigned.
Investors are getting a little more skittish about the 38 Studios deal.
The yield on the first tranche of 38 Studios bonds sold by the EDC jumped last week in the first trade that took place since the company’s solvency crisis burst into public view.
EDC bonds backed by 38 Studios that mature in November 2015 traded on May 23 with a yield of 4.852%, according to data compiled by Bloomberg’s Boston bureau, which first reported the trade. That’s up sharply from the roughly 3% yield the bonds fetched in a previous trade on April 10, according to Bloomberg.
Wells Fargo and Barclays handled the $75 million bond transaction for the EDC and 38 Studios by selling three tranches of bonds on Nov. 2, 2010, to a group of investors that included insurance companies, asset managers, money managers and a community bank, according to the agency.
The $23.685 million first bond tranche matures in November 2015 at a 6% interest rate; the $8.86 million second bond tranche matures in November 2016 at a 6.75% interest rate; and the $42.455 million third bond tranche matures in November 2020 at a 7.75% interest rate.
My WPRI 12 colleague Sean Daly caught up with Governor Chafee this morning and got his reaction to Curt Schilling’s Projo interview, where the former Sox ace blames Chafee for torpedoing 38 Studios:
At least we now know Chafee would vote to put Schilling in the Hall of Fame.
According to the Storm Prediction Center, western Massachusetts (Berkshire County) has the potential of seeing a tornado this afternoon and this evening. Atmospheric conditions will be favorable for a tornado to develop in any t’storms that do develop.
For our area, we are still watching for the potential for severe weather; although that potential is low at this time.
Dan Primack, the plugged-in M&A reporter who writes Fortune magazine’s Term Sheet newsletter, adds some fascinating context in today’s edition about 38 Studios’ lack of success with private investors, particularly in light of Curt Schilling’s Providence Journal interview (emphasis mine):
Two notes: (1) Who scared off private investors in 2007 and 2008, when Schilling was seeking $30 million (and then more) to get the company launched? Remember, this is a gaming startup that never raised a dime in traditional venture capital. From a story I wrote at the time: “VCs I’ve spoken with say that an investment would require quite a bit of “babysitting.”
(2) Who exactly did Schilling even reach out to, to learn that they were scared off? I’ve spoken with half a dozen local venture capitalists – all but one of whom heard Schilling’s initial pitch years ago. None of them even got a call this time around. Maybe I’m naïve, but don’t you ring up every single person in your Rolodex before laying off 300 employees? Who cares what the governor said? Professional investors can do their own fiscal due diligence. Unless you know it’s a lost cause, and are simply looking for a scapegoat…
Primack expressed his views even more bluntly on Twitter: “Curt Schilling is full of it. Lincoln Chafee scared off private investors? Who scared them off in 2007 Curt?”
There were no major headlines about 38 Studios and Rhode Island last August. Curt Schilling’s game company was quietly working on “Project Copernicus” on Empire Street, and the state was busy with other matters, like the looming special session on pensions.
Out of the spotlight, though, Aug. 16, 2011, marked a big day in the 38 Studios-Rhode Island relationship.
That day the EDC delivered 38 Studios $4.1 million in cash from the $75 million bond transaction the previous November. The EDC says the money was provided because 38 Studios had entered “into a satisfactory distribution agreement for its Project Copernicus.”
Strangely, however, no other evidence corroborates that 38 Studios nailed down a distribution deal for Copernicus, even though the EDC gave the company $4.1 million based on the existence of one.
Dense fog from early this morning will thin to hazy sun with temperatures soaring to the mid 80s this afternoon. It not just the 10-15° warmer-than-normal temperatures, but also high humidity that will make for a “scorchah” of a day. Here’s the dewpoint scale for the next few days… Dewpoint measures the amount of moisture in the atmosphere and can be a good gauge of the “comfortability”. And–ugh–we’re borderline oppressive this afternoon and not a big improvement tomorrow.
Dewpoint Scale
The combination of the hot temps and high humidity, combined with a front nearby, could lead to a few thunderstorms firing up by late day. There’s a bigger risk outside of RI–towards western and central New England. In fact, the Storm Prediction Center of NOAA has parts of RI under a slight risk of severe thunderstorms today.
Thunderstorm Outlook
The biggest threat from the storms will be gusty winds, large hail and heavy rain.
T'Storm Wind Potential
Our best chance of seeing showers and storms will come late evening, and Wednesday morning as a cold front approaches our area. Behind the front, drier and more comfortable air will move in for Thursday.
If 38 Studios can’t pay off its $75 million EDC loan, as appears likely, it’ll be up to Rhode Island taxpayers to step in and cover the principal and interest payments bondholders are due through 2020, at a cost of nearly $90 million.
But as Marcia Van Wagner of Moody’s noted last week, these are moral obligation bonds, not general obligation bonds, which means the state only promised to ask for money to pay them off: “Once the appropriation request is submitted [by the governor] to the legislature, the state’s legal obligation has been met and the legislature may decide not to appropriate the funds,” Van Wagner wrote.
The possibility that Rhode Island would actually default seems remote; state officials from Governor Chafee on down told Moody’s taxpayers will make bondholders whole, and the Department of Revenue is already mulling how to deal with the burden left by 38 Studios. But writing in his new Boston Globe column, Josh Barro suggests Rhode Island should seriously consider stiffing bondholders:
Generally, states should perform on their moral obligations. But Rhode Island’s government has more moral obligations than it can possibly service. The state still struggles under a huge unfunded public employee pension obligation, even after a major set of pension reforms last year, which will freeze cost of living adjustments for current retirees for as long as 15 years.
Surely, the state had a moral obligation to pay those pension benefits in full. If it couldn’t afford to meet that obligation, how can it afford to appropriate the nearly $100 million that it will take to pay off the 38 Studios bondholders with interest? A default will surely make it difficult for Rhode Island to issue more moral obligation bonds — but if that means no more 38 Studios-style deals, so much the better.
Read the rest here. And Josh isn’t the only one writing about the 38 Studios deal:
CNNMoney’s Ken Sweet reports the deal was flawed from the start and suggests the Chafee administration should have sought an injunction to keep the workers in place.
Joystiq’s Alexander Sliwinski reports a “Reckoning” sequel was already in the works, though Electronic Arts passed on it.
A warm front draped over S’rn New England coupled with an upper-level disturbance moving through the Great Lakes is sparking some showers and t’storms over parts of Massachusetts and New York. Some t’storms may work their way into our area overnight…especially north of a Providence-Plymouth line. Even if we don’t see any t’storms activity tonight, another chance arrives late tomorrow afternoon. This image shows where the t’storms could be late afternoon….
A cold front will be pushing into the Northeast. Ahead of it, more showers and t’storms will develop Tuesday afternoon. These storms could be quite strong in the afternoon with gusty winds and hail. If they hold together, they would arrive in our area late afternoon and evening on Tuesday. South-southwest winds ahead of these storms will likely knock the punch out of these storms, however. NONETHELESS, we need to keep a close eye on developments through the day.
We have a stalled front over southern New England today. This makes for a very tricky forecast because any little shift in the position of the front can mean big changes in the weather. Therefore, I am going with the “mixed bag” forecast meaning that a little bit of everything is possible. This includes sun, clouds, showers, and an isolated thunderstorm. Notice how all of the above appear on the graphic below. -Pete Mangione
Parades and ceremonies on Memorial should be okay…rain-free.
We’re watching some t’storms moving through NY, NJ and PA…some of that may expand and work its way into our region after midnight, but should be gone by 6am.
A stationary front will be hanging around Southern New England through the day on Monday…that front may help to spark a shower or t’storm during the afternoon, but not everyone will see one. Parades and ceremonies should be mostly rain-free.
Going to the Paw Sox game is always a good time, but especially with fireworks! Man-made fireworks are in the forecast after the game. If we see any of Mother Nature’s firworks (lightning), they should hold off until after midnight. As always, check in with us online or on the air for any changes to the forecast. As of now, it looks like a great night for baseball! -Pete Mangione
After some showers and t’storms rolled through our area this evening, we’ll see some clearing skies. A cold front is slowly working its way through the region. Behind this front is some much less humid air which will be riding into our area on northerly winds later tonight. Our Sunday will be a lot more comfortable than our Saturday was. High pressure building into New England will keep us dry, too! A beautiful day on Sunday!
That cold front will push offshore and stall on Sunday, then begin to return northward in the form of a warm front. We’ll see the clouds increase as a result, but I think we’ll stay dry during the daylight hours of Sunday. Some showers and t’storms ARE likely after dark.
Scattered showers and t’storms are possible on Memorial Day, but it does not look like a washout at this time.
EAST GREENWICH, R.I. (WPRI) – Former Gov. Donald Carcieri still won’t face taxpayers despite the stunning implosion of the $75 million loan guarantee he got them to give Curt Schilling’s video game company, 38 Studios, less than two years ago.
May 31st, 2012 at 10:38 pm by Ted Nesi under Nesi's Notes
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