Donna Walsh on the 38 Studios crisis

Rep. Walsh renews demands for transparency in light of the 38 Studios crisis

News Release from Rep. Donna Walsh (D-District 36)

Like most Rhode Islanders, I am shocked at the recent news about potential financial problems at Curt Schilling’s 38 Studios and the terrible costs that will be put on Rhode Island taxpayers if the company fails. The taxpayers will stuck with the $75 million loan guarantee, plus the associated interest and expenses that could run over $100 million.

Last year, I worked hard for the inclusion of the key elements of my corporate subsidy accountability legislation into the State Budget which then passed the General Assembly and was signed into law by the Governor.

Clearly, those new transparency and accountability rules were not enough for state regulators to foresee 38 Studios’ current problems, and I will continue to work to fix this clearly broken system.

When the 2010 session of the General Assembly enacted former Governor Carcieri’s $125 million small business loan program, we had no idea that a deal had already been struck to take $75 million to use as a lure to get Curt Schilling to move his company from Massachusetts to Rhode Island.

I believe there are lessons to be learned from that one single act. One is that the small business loan program should never have been used in that fashion. We could have helped dozens of Rhode Island-based companies to survive and thrive for the cost of enticing the one single untested business from another state. Governor Carcieri took an enormous gamble with the 38 Studios deal and we may all be the losers for it.

As Co-chair of the Joint Legislative Committee on Economic Development, I will call for hearings to examine what went wrong with the 38 Studios deal, and more importantly, to act on the lessons we learn from this matter to improve our state’s policy toward boosting jobs and the economy through small business development.

I sincerely hope there is a positive solution to the 38 Studios crisis that does not involve further risk of taxpayers’ money. No one benefits if 38 Studios fails. But we must resolve to make more prudent decisions in the future, stressing the fundamentals and avoiding risky ventures, however glamorous. I pledge my own efforts to see that we come out of this crisis smarter and stronger.