38 Studios Dominates Discussion as House Passes $8.7B Budget

Jun 13, 2014

Rep Marcello supporting an amendment for an independent prosecutor on 38 Studios. The amendment failed by a large margin.
Credit Ian Donnis / RIPR

A House vote in favor of a new $8.7 billion budget early Friday was dominated by debate about 38 Studios. The spending plan for the fiscal year starting July 1 includes $12.3 million dollars to continue paying back investors in the failed video game company.

Budget articles passed with lopsided margins and mostly no back and forth. Yet an attempt to establish an independent prosecutor to examine how the state bungled into 38 Studios sparked sharp exchanges. Representative Michael Marcello (D-Scituate) argued in favor of the outside probe.

"We’ve got to have the courage to stand up and say, let the chips fall where they may," Marcello said. "Let’s open the windows, let’s open the doors, let’s call people and find out what happened. The only thing that is stopping us is political will, Mr. Speaker. That is the only thing that’s stopping us."

The amendment for an independent prosecutor was defeated, 61 to 11. Opponents say an outside prosecutor could hurt a state lawsuit meant to recover losses from 38 Studios, and they pointed to an ongoing state police investigation. Meanwhile, the House budget cuts the state corporate tax from 9 to 7 percent, raises the exemption on the inheritance tax, and eliminates tolls on the Sakonnet River Bridge.

Lawmakers debated whether the House budget signals a new direction for the state or takes too much money out of the pockets of Rhode Islanders.

Some state reps say even a one-cent increase next year in the 33-cent per-gallon gas tax is too much for struggling residents.

But Representative Joseph Trillo (R-Warwick) says including the gas tax increase as part of new fund to fix roads and bridges is the right thing to do. As part of the fund, vehicle inspection fees will rise from $39 to $55, and a good driver discount for minor vehicle offenses will double to $50.

“Guess what?" Trillo said. "Every time that car goes over potholes and bangs, you’re taking life out of the vehicle. So in essence, you’re saving your constituents’ money by repairing these roads.”

The spending plan for the fiscal year was passed just after midnight on a 63-to-12 margin. The vote was delayed by a temporary breakdown in the House voting machine that was blamed on an overloaded computer server,

Members of House Speaker Nicholas Mattiello’s leadership team says the budget will help improve the economy by making Rhode Island more competitive on business and inheritance taxes. Yet other reps say the spending plan doesn’t do enough to tackle Rhode Island’s future deficits.

The budget authorizes a new URI-RIC nursing school and places four referendum questions – representing $250 million – on the November ballot. The biggest of those proposals is 125 million dollars for an engineering school at URI.

The spending plan also includes a statewide cap on the minimum wage.

The state Senate is expected to vote on the budget Monday.