Projo 7 to 7 News Blog

The largest state employees union has made a last-second bid to block a new state law that reduces retirement benefits for state employees who retire after Sept. 30.

Council 94, the American Federation of State, County and Municipal Employees, filed a motion for a temporary restraining order this morning.

At this time, there is some disagreement over the status of the motion.

According to the governor's office, Superior Court Judge William C. Clifton rejected Council 94's motion this afternoon, following a hearing with attorneys representing the governor and the union, which represents roughly one-third of the state's unionized work force.

But Council 94 spokesman James Cenerini disputed the governor's interpretation of the day's events.

"My attorney was very clear that the judge stated that he was not granting the motion, he was not denying the motion and he was not ruling on the motion," Cenerini said, noting that union attorneys would pursue the issue Monday morning in Providence Superior Court.

Governor Carcieri, in a statement, said he was pleased with the judge's "decision to deny the temporary restraining order," which he said "upholds the state's ability to proceed with the implementation of the changes to the public employees' retirement health care benefits. The change was one measure recommended by me, and passed by General Assembly, in response to the state's fiscal crisis."

When notified of the union's interpretation of the ruling, Carcieri spokeswoman Amy Kempe stood behind the governor's statement.

>> Continue reading: Update: Late appeal filed to block retirement changes

A day after state officials fought successfully to retrieve $138 million that had been parked in accounts with the troubled American International Group, it turns out that Rhode Island agencies have at least $260 million more in similar unsecured accounts managed by other companies.

The "SWAT" team assembled earlier in the week by the state treasurer's office and the governor's budget office met today to form a plan of action. Representatives from the General Assembly also attended the meeting, which was held in Treasurer Frank Caprio's State House office.

There is no immediate plan to shift the money -- which is invested with currently-stable companies like Transamerica Life Insurance and Citibank -- to secured accounts backed by collateral, which would generally protect the money if those financial instutitions face similar troubles as AIG, according to Caprio.

Overall, state agencies have at least $740 million sitting in investment accounts. All but $260 million is backed by collateral, according to data provided by the state today.

But the SWAT team will continue to collect data and will make recommendations to the "quasi-public" state agencies that largely control the funds.

Those agencies include Rhode Island Housing (which has $70 million in unsecured money invested), the Rhode Island Student Loan Authority ($48 million) and the Rhode Island Clean Water Finance Agency ($112 million.)

The $138 million held with AIG -- also in unsecured accounts -- was invested by the state Department of Transportation, Rhode Island Clean Water Finance Agency, and the Rhode Island Housing.

-- Steve Peoples, of The Journal State House bureau

PROVIDENCE -- General Treasurer Frank T. Caprio and the governor's budget office confirmed this afternoon that the troubled insurance giant American International Corporation has agreed to give back roughly $138 million of state agency dollars that had been locked in investment accounts.

Earlier in the day, Caprio suggested that he was nearly sure that Rhode Island would get its money back following the federal bailout plan formally announced today.

But at around 5:30 p.m., Caprio's office said the state received a written notice from AIG informing them the funds would be wired back in the coming days. Caprio and other state leaders will decide tomorrow specifically where to invest those funds, which are needed for major construction projects such as the "IWay."

State budget officer Rosemary Booth Gallogly noted the return of the state's money was a positive development and the result of continued conversations with AIG.

"We successfully worked all day yesterday to get this money released," she said.

PROVIDENCE -- General Treasurer Frank Caprio confirmed today that at least one other government agency has millions of dollars locked in investment accounts with the troubled insurance giant American International Group.

Rhode Island Housing Corporation has about $7 million in an AIG account, Caprio said, adding that the agency is in the process of moving the money to a "guaranteed investment contract" with another company.

Projo.com reported yesterday that state agencies have a combined $131 million tied up in AIG investment accounts. That total grew to $138 million with today's disclosure. The total may grow as officials continue to collect information from agencies and even municipalities across the state.

But Caprio said that the federal takeover reported last night of AIG virtually guarantees that Rhode Island will be able to access its money.

"On a scale of 1 to 10, yesterday we were probably somewhere around a 4 or 5 as far as what will be the future of AIG and how would we be able to access the resources in let's say an orderly fashion," Caprio said. "Now I would say we're 9.9. I wouldn't say 10 because in today's world you can't say with certainty that something's going to happen."

AIG is now "backstopped by the full faith of the United States' Treasury," Caprio said. "That's as strong as you can get in today's world."

Video: State Treasurer Frank Caprio says yesterday: 'We're in it for the long term'

- Steve Peoples, of the The Journal State House Bureau

The Carcieri administration will ask the federal government to cap spending on Rhode Island's health programs for the low-income, elderly and disabled at $12.4 billion over the next five years, in accordance with a "global Medicaid waiver" proposal given to the General Assembly today.

The governor said he needs the waiver to control mounting Medicaid-related costs. In exchange for agreeing to limit Medicaid spending through 2013, the federal government would grant the Carcieri administration broad authority to change the programs without federal oversight.

Changes, for example, would affect seniors' ability to access nursing homes, community-based services, group homes for the disabled, and health insurance programs for the low-income. But the waiver released today doesn't include many specifics. See the 168-page proposal here.

The Carcieri administration acknowledges that the waiver concept, which has never been done before in any state, carries an inherent risk.

Critics fear the state could run out of its Medicaid allotment before five years is up, forcing the state to slash Medicaid programs or to bear the full costs on its own. Last year, the state spent roughly $1.8 billion -- more than one quarter of the total state budget -- on Medicaid programs, primarily on long-term care for the elderly and disabled.

While the administration today said it hopes to secure $12.4 billion over five years, that is merely the starting point for negotations. Other key questions are subject to negotiations, including "escape clauses" that would allow the state to walk away from the spending cap.

Carcieri officials could not outline a specific timeline for how long negotiations may take. But the $67 million in savings outlined in the state budget require an Oct. 1 implementation date for dozens of waiver-related changes.

Administration officials acknowledged earlier today that the Oct. 1 deadline may not be met. But the administration is "on the hook" to save $67 million and would do so regardless, according to the Adelita Orefice, the deputy secretary of health and human services.

-- Steve Peoples, Journal State House Bureau

NORTH PROVIDENCE -- The largest state employees union has overwhelmingly rejected a four-year deal brokered by its own leaders and the Carcieri administration, by a vote of 2,870 to 196.

Council 94, American Federation of State, County & Municipal Employees, announced the election result this afternoon, after tabulating the votes of its 24 member local unions this afternoon in the basement of its Charles Street headquarters. Union leaders counted the ballots -- there were more than 3,000 -- by hand.

"Our membership has spoken by voting, and they have rejected the proposed settlement with the state," Council 94 President J. Michael Downey said in a written statement. "Council 94's membership strongly believes that the proposed settlement would hurt their economic/job security and their families. There simply were not enough positive aspects of the proposed settlement to outweigh the harsh economic hits which were spread out over four years."

Among the highlights of the master agreement were: pay raises of zero, 2.5 percent, 3 percent and 3 percent during each of the next four years; a one-day pay reduction in the current year that employees can recoup as a paid leave day; and escalating increases in the percentage of premium the employees will be required to pay for their health insurance.

Rank-and-file members had lobbied against the agreement before the vote. Workers in recent weeks distributed a flier that read: "OUTRAGEOUS MEDICAL CO-PAYS!...NO RAISES IN 2008! OUTRAGEOUS LEADERSHIP!"

Council 94 represents roughly one third of state government's workers. The rest are represented by 12 independent unions, all of which must vote separately on the same master agreement. Seven of the 12 have voted to ratify the deal, while three have voted it down. Others have yet to vote.

It's unclear what will happen to Council 94 and those independent unions who rejected the deal, given that the Carcieri administration issued letters late last month terminating the unions' most recent conracts, which expired July 1.

The governor's chief legal counsel, Kernan F. King, said earlier today that the Carcieri administration could force changes on those unions. "The state has some options that it can take unilaterally, which would be interesting," he said.

In a statement late this afternoon, Governor Carcieri said, "I had hoped that Council 94 would have agreed to pull together and do what is best for the state.

"The state's economy is showing signs of worsening, adding even greater pressure to the budget, and I have an obligation to take whatever steps necessary to balance the budget. I will be meeting be with staff over the next several days and will decide the best course of action for all Rhode Islanders."

-- Steve Peoples, Journal State House Bureau

>> Continue reading: Update: Council 94 overwhelmingly rejects contract

CENTRAL FALLS -- Several community groups will gather in Central Falls this afternoon to protest millions of dollars in budget cuts that take effect today, the first day of the state's fiscal year.

The rally, which is being organized by the Rhode Island Coalition for the Homeless, starts at 2 p.m. Speakers will include adults slated to lose health care coverage, welfare recipients who will be subject to tighten time limits, and representatives from nonprofit groups whose state funding was cut in half in the state budget approved by the General Assembly and signed by the governor late last month.

Seeking to close a $425-million budget deficit, lawmakers cut in half state funding for programs such as Meals on Wheels, the Rhode Island Community Food Bank and the Crossroads homeless shelter.

-- Steve Peoples, Journal State House Bureau

PROVIDENCE -- Governor Carcieri plans to sign the state budget tomorrow at 1 p.m., the final step in finalizing the $6.9 billion tax-and-spend approved by the General Assembly last week.

The plan will become law after it is signed, and outlines virtually all state spending for the budget year that begins July 1.

The governor's office issued a statement this afternoon announcing the signing ceremony, which will take place in the ornate State Room on the second floor of the State House.

"This signing will mark the resolution of the budget crisis while avoiding any broad based tax increases, an accomplishment that is a credit to the House Speaker Murphy, Senate President Montalbano, and all legislators,” Governor Carcieri said. “It also marks the introduction of structural reforms that will reduce projected deficits in future years.”

The House Finance Committee estimates that the budget will lead to a $97-million deficit for the coming fiscal year, which is down considerably from previous projections.

Murphy and Montalbano are expected to attend the ceremony.

Among other things, the budget increases local education assistance for cities and towns, but freezes non-education aid at reduced levels. It includes $90 million in cuts to the state’s work force (which have yet to be detailed) and another $67 million in savings by reducing Medicaid programs that serve the state's poor, elderly and disabled.

After the budget was passed by the Democrat-led House, the Republican Carcieri said, “This budget represents a watershed moment in the recent history of Rhode Island state government. In the face of a severe fiscal crisis, we have worked together to reduce spending and balance the budget without raising taxes.”

-- Steve Peoples, Journal's State House Bureau

PROVIDENCE -- The state House of Representatives will convene today at 2 p.m. to approve a state budget for the fiscal year that begins July 1.

The budget -- which consists of at least 39 separate "articles" -- is aimed at closing a $425 million deficit.

The massive budget bill includes proposals to transform the state's Medicaid system for the elderly, poor and disabled. Community service organizations like Meals of Wheels and Crossroads stand to lose hundreds of thousands of dollars. And a new tax on health insurers may lead to higher health care costs for residents.

The budget debate on the House floor is expected to be messy. Around 70 "amendments" have been drafted by lawmakers wishing to change specific parts of the budget proposal or create new sections. The amendments have not been released publicly.

The budget debate typically spans long into the night and often into the early-morning hours.

The Journal will be on hand for the entire debate. Check projo.com later today for updates.

The Senate -- which has already negotiated key provisions in the budget with House leadership -- is scheduled to vote on the tax-and-spend plan Friday.

That's the same day that the Assembly is tentatively set to recess for the summer.

Keep track of the House and Senate calendars via the General Assembly's Web site.

Read the budget bill that was passed by the House Finance Committee on June 11 and sent to the full House.

-- Steve Peoples, Journal State House Bureau

PROVIDENCE -- The House Finance Committee is "very likely" to vote today on a sweeping proposal to help balance a current-year budget deficit of at least $151 million, a House spokesman said.

The "supplemental" budget bill is scheduled to be heard this afternoon after the House recesses -- generally around 5 p.m. But it's not the first time it's been posted on an agenda, only to be put off.

House spokesman Larry Berman, however, said that the House leadership has met and that it is "very likely" that the plan will be heard and voted on today.

The bill will address a budget gap in the fiscal year that ends in roughly two months -- June 30. The Assembly will consider a separate plan to balance next year's budget -- and a projected $384 million deficit -- later in the session.

The House Finance Committee has been working off a supplemental budget proposed by Governor Carcieri in January. But what the panel has done with that proposal will be unveiled today.

The governor's proposals included:

- Cutting state aid to cities and towns in the current year by more than $12 million.
- Cutting subsidized health care, known as RIte Care, for 7,400 low-income adults and more than 2,800 immigrant children.
- Cutting retiree health benefits for state workers who retire after June 30.
- Cutting welfare benefits for 3,400 children who have received benefits for longer than 60 months.
- Capping the Training School population at 148 boys and 12 girls.
- Creating a new $50 ticket for drivers caught talking on hand-held cell phones

- Steve Peoples, Journal State House Bureau

PROVIDENCE -- Governor Carcieri is meeting now with DCYF director and cabinet member Patricia Martinez, a day after she said the governor's push to curb illegal immigration had created a climate of "hatred" in Rhode Island.

The governor has yet to comment directly on Martinez's remarks, which came in a Journal interview yesterday morning following the annual Kids Count breakfast.

It is unclear if Martinez or Carcieri will speak publicly after the meeting, which began around 3:30 p.m. in the governor's State House office.

Martinez, a member of the governor’s Cabinet for the last three years and a former leader in the Hispanic advocacy organization Progresso Latino, said Carcieri’s proposal, like a handful of bills proposed by the General Assembly, "is really slamming immigrants" by promoting racial profiling.

"I think the executive order along with what has happened in the media has really created an environment that is unfortunate," Martinez said yesterday. "Whether it was the purpose or not, you talk to people in church, you talk to people in the supermarket, you go to the little hair salons, people are afraid. And not because they are undocumented, but it’s just because you are going to be stopped just because you look different, just because you have an accent, just because now it has created this hatred."

Extra: Read the full text of Carcieri's executive order.

-- Journal State House Reporter Steve Peoples

PROVIDENCE -- The governor's office confirmed this evening that communications director Steve Kass has been moved to the state Emergency Management Agency, where he will become the primary spokesman and public education officer.

"The Governor is assigning Steve Kass to oversee communications and be spokesman for the Emergency Management Agency, where the need for improved communications has been widely discussed in recent months," said the governor's spokesman Barbara H. Trainor.

The EMA was thrust into the news in December following a minor snowstorm that brought the capital city to a standstill, stranding hundreds of children on school buses for hours.

Current spokeswoman Brittan Bates was performing communications duties in addition to her role as a coordinator for emergency exercises, according to the EMA.

"What I have asked for some time and now, and thank goodness we’re getting some support from the governor's office, is someone who can inform the media and the public, and be the liaison during times of crisis or emergency," said Maj. Robert T. Bray, adjutant general of the Rhode Island National Guard.

Kass will continue to earn his current salary of $126,541. As of last June, Bates earned $47,138.

-- Steve Peoples of the Journal State House Bureau

PROVIDENCE -- The governor's office confirmed this evening that communications director Steve Kass has been moved to the state Emergency Management Agency, where he will become the primary spokesman and public education officer.

"The Governor is assigning Steve Kass to oversee communications and be spokesman for the Emergency Management Agency, where the need for improved communications has been widely discussed in recent months," said the governor's spokesman Barbara H. Trainor.

The EMA was thrust into the news in December following a minor snowstorm that brought the capital city to a standstill, stranding hundreds of children on school buses for hours.

Current spokeswoman Brittan Bates was performing communications duties in addition to her role as a coordinator for emergency exercises, according to the EMA.

"What I have asked for some time and now, and thank goodness we’re getting some support from the governor's office, is someone who can inform the media and the public, and be the liaison during times of crisis or emergency," said Maj. Robert T. Bray, adjutant general of the Rhode Island National Guard.

Kass will continue to earn his current salary of $126,541. As of last June, Bates earned $47,138.

-- Steve Peoples of the Journal State House Bureau

PROVIDENCE -- The governor's office announced a major shakeup this morning of key directors and top aides.

At least one high-profile member of Governor Carcieri's inner circle -- Deputy Chief of Staff John R. Pagliarini -- has been replaced in changes that shift Department of Administration Director Beverly Najarian into Pagliarini's job and Department of Transportation Director Jerome Williams into Najarian's position.

It appears that Communications Director Steve Kass may be replaced as well. The governor has hired former state House of Representatives candidate John Robitaille as a "senior adviser --communications," and said that the restructuring would not result in "a net addition in staff." The governor's office could not immediately clarify Kass's status.

Kass is on medical leave, Carcieri spokesman Jeff Neal said.

"I think Governor Carcieri and Steve Kass will sit down and discuss Steve's future role when Steve returns from his medical leave," Neal said.

Rhode Island's new Department of Transportation director will be Michael Lewis, the former embattled director of Boston's "Big Dig," who retired from the Massachusetts Turnpike Authority at the end of November.

Robitaille, the Portsmouth Republican who lost a bid to unseat Rep. Amy G. Rice in November 2006 by just nine votes, is the president of Middletown's Perspective Communications Group, a communications firm.

The staffing moves come four days after a Brown University poll showed Carcieri's approval ratings had dropped to 40 percent -- an all-time low for the term-limited Republican governor.

The governor's office would not immediately explain the rationale for the staffing changes. In a press release issued this morning, the governor would only praise the staffers involved in the shakeup.

-- Steve Peoples of the Journal State House Bureau

>> Continue reading: Alert: Major shakeup in governor's office announced

A key Senate committee issued a comprehensive report today warning that there aren’t enough Department of Children, Youth and Family workers looking after neglected and abused children across the state.

“State budget constraints and the cap on state FTE’s (full-time equivalent positions) that may be filled, contribute to a disconnect between cases and staffing -- between children in need of protection and the state’s ability to respond,” reads the 25-page report, which includes a host of recommendations by the Senate Health and Human Services Committee following four public hearings aimed at investigating DCYF practices.

The committee heard several hours of testimony from DCYF director Patricia Martinez, in addition to dozens of people concerned with the state of Rhode Island’s child welfare system. DCYF Family Service Unit caseworkers monitor approximately 2,576 families, according to figures released last month.

Read the report.

-- Steve Peoples of the Journal State House Bureau

>> Continue reading: Senate committee finds shortage of DCYF caseworkers

Governor Carcieri told lawmakers tonight that the state is teetering on the brink of financial disaster.

“The State of the State is at a tipping point,” he told a packed chamber of senators, representatives, judges and mayors. “If we are not willing to make the hard choices, then the tipping point will lean to the side of disaster, and we will have failed the people who sent us to serve them.”

Republican Carcieri served notice he hopes to bring public employees’ work weeks and compensation packages “back in line with the vast majority of private-sector employees,’’ impose a firm two-year time limit on welfare benefits, put city and town employees in one health-care plan with state workers, and adopt what he billed as a “Medicaid Reform Plan’’ aimed, in part, at keeping more senior citizens out of costly nursing homes.

“This crisis presents us with an unprecedented opportunity to make fundamental and lasting change that will quicken the transformation of Rhode Island from a ship today that’s taking on water to a world-class vessel,’’ he told the lawmakers in his annual State of the State address.

Not since the credit union crisis of the early 1990s has the state faced such large and imminent deficits: $151 million in the current year, up to $450 million in the budget year that begins on July 1.

-- Journal State House Bureau

>> Continue reading: Carcieri: RI on brink of financial disaster