Letter: Protecting taxpayers from another 38 Studios

Posted 4/24/17

To the editor:

The mistakes made in the funding of 38 Studios cost Rhode Island taxpayers millions. The legislature owes it to the public not to repeat those costly mistakes with Pawtucket Red Sox …

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Letter: Protecting taxpayers from another 38 Studios

Posted

To the editor:

The mistakes made in the funding of 38 Studios cost Rhode Island taxpayers millions. The legislature owes it to the public not to repeat those costly mistakes with Pawtucket Red Sox stadium.

There is an initiative by the Pawtucket Red Sox owners to build a new baseball complex in Rhode Island. Last week, I introduced legislation (H6128), with support from the House and Senate GOP caucuses, to prevent the Rhode Island Commerce Corporation (RICC) from directly funding any aspect of a baseball park without General Assembly approval. This legislation would require approval from the legislature before the RICC could provide leases, loan guarantees, grants or any financial assistance, for any baseball park, recreational facility or an ancillary facility development.

The RICC currently has the authority, without any legislative oversight, to provide up to $15 million in equivalent tax credits, loans or grants to any entity. In addition, the RICC can issue $15 million for ancillary development like a parking garage or mixed-use retail facility. The RICC can also provide funding in subsequent years to the same projects. The potential exists that Rhode Island taxpayers could be on the hook for another 38 Studios debacle.

Since the RICC (formerly Rhode Island Economic Development Corporation) was rebranded, it has provided over $104 million in economic stimulus funding. I am a member of the General Government Finance Subcommittee and the RICC proposed FY18 budget is $76 million and includes another $33.8 million for economic development initiative funds.

The goal of the RICC is to attract long-term, well-paying STEM, high-tech and manufacturing jobs. Investing in a baseball stadium does not meet that goal. A majority of the jobs at a baseball ballpark are not high-paying full-time positions. The only jobs that appear to be high-paying are for the ownership, management and PawSox players like Rusney Castillo, who signed a $72.5 million contract.

Public support is lacking as well. In 2015, a Hassenfeld Institute survey found that 74 percent of those polled opposed the use of taxpayer subsidies for a minor league baseball park. I am a baseball fan, but not a fan of taxpayer funds being used for a private business venture in which the return on investment has a history of being a net loss for taxpayers. I do believe that the use of legislature budgeted taxpayer funds for infrastructure (roadways, utilities, sidewalks, etc.) upgrades to support the renovation of the existing stadium or building of a new ballpark is a reasonable expectation from the government.

Coincidently, on the same day as the H6128 announcement, The Wall Street Journal published an article titled “Ballpark Adds to Hartford’s Fiscal Strains” that supports this claim. The article delved into the city spending $68 million to cover most of the construction costs to build a 6,000-seat AA minor league baseball park. Hartford’s mayor said that the ballpark will never generate enough money to pay back the debt. Rhode Island taxpayers have already invested nearly $30 million over the last 20-plus years in the Pawtucket stadium. The General Assembly, which can be held accountable to the public through elections, should provide oversight on how large amounts of taxpayer dollars are spent. We should learn the expensive lessons of 38 Studios.

Rep. Kenneth Mendonça

20 Peleg Road

Portsmouth

Kenneth Mendonça represents the 72 House District (Portsmouth and Middletown) in the Rhode Island General Assembly.

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