RI's bet on Schilling shines light on Chafee

PROVIDENCE, R.I. (AP) — Rhode Island's gamble on former Red Sox pitcher Curt Schilling's video game company may be in jeopardy, but it could pay political dividends to Gov. Lincoln Chafee, who has vowed to protect a state investment in the company that he once opposed.

Before he took office, Chafee was a vocal critic of the state's decision to guarantee $75 million in loans to 38 Studios. But now that the company's future is in question, Chafee has promised to try to save the company even as he rules out additional taxpayer support.

"Wherever there is any kind of hope you can bet I'll be putting all my energies in that area, whether it's a 1 percent chance or a 2 percent chance I'll still be working," the Republican-turned-independent governor said Wednesday. "Lot of money at stake here."

Lawmakers interviewed by The Associated Press said Chafee had every right to say 'I told you so' after 38 Studios missed a $1.1 payment to the state by more than two weeks. Instead, they said, Chafee focused on finding ways to rescue the company without exposing the state to greater risk.

"He's handled this pretty well so far," said Sen. James Sheehan, D-North Kingstown. "You don't want to see 38 Studios go under, but you also don't want to put more taxpayer dollars into this. It's a difficult balance."

Not everyone is convinced Chafee's administration did all it could before Schilling's company ran into trouble. Treasurer Gina Raimondo — widely believed to be considering a run for governor — questioned whether Chafee should have known earlier about 38 Studios' struggles.

"A company does not run out of money overnight," Raimondo, a Democrat, told The Providence Journal. "A company is not a year behind (on) product development overnight. So the question is: how has the state been monitoring this investment?"

Chafee opposed the loan guarantee deal in 2010 when he was campaigning for governor, calling it "one of the biggest risks I've ever seen." But once elected, he promised to work to protect the state's investment.

The issue provides the typically low-key governor with a highly visible opportunity to defend taxpayers while showcasing his political pragmatism, according to Brown University political science professor Wendy Schiller.

"This could turn out to be one of Chafee's defining moments," Schiller said. "He's an old Yankee Republican, saying 'you don't throw good money after bad.' It's smart thinking. I think it really helps him with his credibility."

Chafee is enjoying a bit of a winning streak following a difficult first year in office. Last year, he saw his sales tax expansion proposal falter in the General Assembly. He enraged critics when he backed a plan to give in-state tuition to illegal immigrants and called the Statehouse Christmas tree a "holiday tree."

This year, however, he received credit for helping to broker a deal between Providence and Brown University under which the Ivy League school will increase its voluntary payments-in-lieu-of-tax to the city. He won the support of mayors with a proposal to give cities greater power to cut pension benefits. He delighted gay marriage supporters by ordering state agencies to recognize same-sex marriages performed out of state, even though they aren't legal in Rhode Island.

38 Studios presents Chafee with arguably his highest-profile test yet.

Rhode Island lured the company from Massachusetts in 2010 with a $75 million loan guarantee that officials said would mean 450 new jobs and millions of dollars in new tax revenue.

Questions about the company's viability surfaced when it was more than two weeks late on a $1.1 million payment to the Economic Development Corp. this month. State officials said last week they had been told by the company that it wouldn't be able to make its payroll. Chafee said Monday that some employees had been laid off.

38 Studios may offer Chafee a chance to be the taxpayers' champion, but voters could still hold him accountable if the episode ends badly, according to House Minority Leader Brian Newberry, R-North Smithfield.

"I don't think voters will hold him responsible for the loan guarantee, but I think they will hold him responsible for how he's handling the situation now," he said. "Right now, it's too soon to know."

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Associated Press reporter Erika Niedowski contributed to this report.