Payment for 38 Studios Bonds Clears Early-Morning Vote

An early-morning vote to stop payment of $2.5 million toward so-called "moral obligation bonds" stemming from the meltdown of 38 Studios failed in the Rhode Island House of Representatives early on Wednesday morning.

Barely 12 hours after the 54-20 tally to reject Cranston Rep Charlene Lima's proposal, House members are scheduled to take up their $8.2 billion state budget plan starting at 2 pm Wednesday afternoon, the Providence Journal reported.

Bloomberg Businessweek quoted Rep. Linda Finn [D-Middletown] as saying a default on the bonds would be "a bad reflection on the state."

Lima had sought to stop the payment, the first toward $75 million in bonds borrowed in the waning days of the Carcieri administration in 2010 to fund the video game company run by former Red Sox pitcher Curt Schilling.

[With interest, the bonds are expected to cost the state upwards of $90 million.]

The bonds formed the basis of a loan guarantee managed through a newly-formed Job Creation Guaranty Program; on Tuesday night, the House approved a bill eliminating the program by a 73-2 vote.

Legislators including Smithfield Rep. Thomas Winfield — who serves as chairman of the Joint Committee on Economic Development — said they originally voted for the loan program because they had been told it would be provided to several companies and not just 38 Studios.

The Journal also reported that House members have to address a potential $12.9 million deficit after supporting Gov. Lincoln Chafee's plan to hold that amount — created from higher-than expected tax payments — and use it to fund the fiscal 2014 budget.

Once approved by the House, the fiscal 2014 budget then heads to the Senate.

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