Sept 25 Rhode Island Governor Lincoln Chafee said on Tuesday he would consider whether to overhaul the state's economic development system following the collapse of 38 Studios, the video game company owned by Boston Red Sox pitcher Curt Schilling.
A report, commissioned by Chafee and published on Tuesday, suggested that the quasi-public Rhode Island Economic Development Corporation, which guaranteed a $75 million loan to Schilling's company in 2010, be restructured.
It also recommended the creation of a new state office to oversee broader economic policy and development because Rhode Island is the only New England state to lack such an agency.
The analysis was conducted by the independent nonprofit policy research organization Rhode Island Public Expenditure Council.
"38 Studios was and remains an economic development crisis for the state of Rhode Island," Chafee said in a statement. "I will continue to digest the report over the coming weeks as my administration works to put in place the best structure for sustained and long-term business growth."
The EDC focuses on job creation and helping businesses expand or relocate to Rhode Island. It issues bonds and serves as a conduit for other state bonds. It also manages a revolving small business loan fund and other financing programs.
The corporation further acts as the state's main development agency for broader economic issues, but it lacks established ways to measure outcomes, is understaffed and needs to be restructured, the report said.
Under former governor Donald Carcieri, Schilling's company won the taxpayer-backed loan guarantee as an incentive to move his company's headquarters from Massachusetts to Rhode Island.
In May, 38 Studios failed to make payroll and was more than two weeks late on a $1.4 million loan repayment to Rhode Island. By June it had filed for a Chapter 7 liquidation bankruptcy, leaving the state potentially on the hook to repay the bonds used to fund the loan.
This month, Carcieri told local investigative reporters for WPRI-TV that he took responsibility for pushing the loan through, but he questioned whether 38 Studios received proper oversight once he was out of office.
Rhode Island has struggled throughout the recession to regain its economic footing, and its recovery has lagged behind neighboring states and the nation. The state's unemployment rate, which was 10.7 percent in August, is the second worst in the nation.