Gina Raimondo was elected to be Rhode Island’s next governor in the 2014 elections. She is the first Democrat to be elected to the position in over a decade and will be the state’s first female governor. The interview was conducted for BPR by Henry Knight and Michael Chernin.
Brown Political Review: The lineage of Rhode Island governors has thus far consisted only of white men. What would it mean to you to be the first to break that mold?
Gina Raimondo: It would be significant — to me and also to my 10-year-old daughter. It’s time — it’s time for a woman to be governor [of Rhode Island]. I think so much of what has held Rhode Island back is that we have a culture of favoring insiders. I want to send a signal that it’s time to break that culture and treat everybody equally. Politics is not just for people who know somebody, because that political culture has held us back for too long.
BPR: Are there any other governors or states in particular that you might look to for examples of how to deal with the challenges facing Rhode Island?
GR: The story in Massachusetts is not that different from Rhode Island. Once upon a time, we were both leaders in manufacturing, and then the low-skill manufacturing jobs left and went to Asia. Unfortunately, Rhode Island did not reposition itself in new industries — Massachusetts did. They partnered their colleges and universities with industry and became a powerhouse in the areas of information technology and healthcare. And as a result they have a vibrant economy, and we don’t. There are many lessons we can learn as we bring back our economy.
BPR: You’ve said: “You can’t have well-funded and flourishing public schools and public buses and an underfunded pension system. It’s just not possible.” Massachusetts would seem to defy this logic. Why do you see progressivism and the pension plan as mutually exclusive?
GR: I don’t know enough about Massachusetts to talk about that intelligently, but here’s what I can tell you about Rhode Island: When I took office, the pension system in Rhode Island was 48 percent unfunded — one of the highest unfunded liabilities of any state in the country. If we hadn’t taken action to change it, several cities and towns would have almost certainly gone bankrupt in the near term. Rhode Island has cities and towns — Woonsocket, West Warwick, Coventry, Cranston — that are teetering on bankruptcy, and pension reform in the first year alone saved a hundred million dollars for cities and towns. Comparing Massachusetts to Rhode Island is apples and oranges, because Massachusetts has a robust economy and a stable fiscal situation. Until recently, Rhode Island had the highest unemployment rate in the country and had many cities and towns on the brink of bankruptcy. Frankly, one actually went bankrupt on account of their pension woes. So in Rhode Island, at this point in time, it’s just impossible to pay the pension bill the way it was and also have money for public buses, public schools and so on.
BPR: How do you respond to critics who brand you as a Democrat in name only?
GR: I am running for governor to get Rhode Island back to work and to rebuild the manufacturing sector, which will provide good middle-class jobs to put men and women back to work, to rebuild our infrastructure, to make college more affordable, to make sure we have flourishing public schools, to raise the minimum wage — I’d like to see the minimum wage go up to $10.10. Rhode Island is in a jobs crisis, and I’m running to be the jobs governor, to get people back to work and rebuild the middle class with good high-paying jobs and to make sure that kids can get an education and the skills to get jobs.
BPR: Forbes Magazine said that your pension reform plan slashes benefits and saddles taxpayers with the burden of paying the steep fees of hedge funds. Why are hedge fund investments a smart play for a state pension fund?
GR: As you know, our job is to manage these assets in a way that provides strong long-term returns and, most importantly, to make sure that money is there to pay pensions. That’s what our strategy is doing. We have strong returns after we’ve paid off all the fees, with less risk. There’s much less risk in the portfolio now than when I took office. You have to remember that in the 2009 stock market crash, Rhode Island’s pension system lost $2 billion, and it took us more than five years to climb out of that hole. If you want the highest return possible, then put all your money in the stock market. But it’s very risky. What we’ve done is to diversify the portfolio, and it’s working. Brown and every major endowment and state pension fund also pursue this strategy.
BPR: You have yet to take a public stance on decreasing the state corporate tax. Shouldn’t corporations be paying their fair share to improve the quality of Rhode Island’s public education and transportation systems?
GR: You need a tax structure that’s fair, and it is absolutely true that everybody needs to pay their fair share. This means corporations and certainly the wealthy, but we also have to be competitive as a state — and until recently Rhode Island had uncompetitive, high corporate taxes. The General Assembly just moved to lower the corporate tax rate to put us in line with the rest of New England, and I support that because Rhode Island is in a jobs crisis, and if we have business taxes that are much higher than our neighbors, that could be problematic. The real taxes in Rhode Island that I worry about are property taxes. The average family is struggling to pay their property taxes because cities and towns pay a big portion of the pensions. With respect to tax policy, I think it’s important to have a strategy. I have a comprehensive jobs plan designed to create 10,000 jobs in the next 10 years. Taxes are a piece of it, but really we need to invest in education: Invest in worker training and in tourism so that we can create jobs. That’s how you grow revenue — not necessarily by raising taxes, but by getting tens of thousands of people back to work.