Rhode Island debt payment, budget before governor

Reuters News
Posted: Jun 28, 2013 6:09 PM
Rhode Island debt payment, budget before governor

(Reuters) - Rhode Island Governor Lincoln Chafee is expected to approve a $2.5 million debt service payment on bonds used to lure former Boston Red Sox pitcher Curt Schilling's now bankrupt videogame company to the state.

However the payment is part of the $8.2 billion budget for fiscal 2014, which Chafee is still reviewing, his office said on Friday. He has seven days to sign it.

The state legislature sent its spending plan to Chafee on Thursday. The inclusion of the $2.5 million payment ends a controversial debate on the state's willingness to pay its debt. Some lawmakers sought to block the payment for the company, called 38 Studios, but their efforts to strip that money from the final budget bill failed.

The governor has said he supports making the payment. The interest payment, which is due in May, is on $75 million of taxable bonds that the state sold in 2010 to make a loan to 38 Studios.

The company's loan payments were originally supposed to secure the bonds. Now the state could wind up paying $89 million for them, according to its director of administration, Richard Licht.

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Moody's Investors Service earlier in June downgraded by two notches its rating on the 38 Studios bonds and put $2.1 billion of Rhode Island's debt under review for possible downgrade.

(Reporting by Hilary Russ; Editing Tiziana Barghini and James Dalgleish)