Political Scene: RI General treasurer's race will be one to watch

The words "general treasurer" bring to mind actuarial tables, green-tinted visors and borrowing limits with so many zeros your eyes roll back in your head.

But this year's race is spicy.

The Democratic primary pits a popular former mayor and state party vice chairman – James Diossa – against longtime Raimondo administration economic development maestro Stefan Pryor, who brought the corporate incentive back to Rhode Island after the winter of 38 Studios.

As they cross the starting line, all indications are it's close.

At last week's Democratic Convention, Diossa beat out Pryor for the state party endorsement 84 to 73, the tightest margin of any of the statewide endorsement contests this year.  

Even though Diossa will get the coveted endorsement star next to his name, the Pryor camp took the vote as encouragement given Diossa's position on the state committee and how much longer he has been campaigning.

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James Diossa, former Central Falls mayor

The 36-year-old son of Colombian immigrants, Diossa has a strong base of support in the State House, in city halls and the growing Latino community.

Stefan Pryor, former Commerce Secretary

Pryor, who helped redevelop the World Trade Center site after 9/11, hat propelled Gina Raimondo to power here and within the Biden administration.s strong ties with Rhode Island's C-suiters and the building trade unions tha

Both Democrats are personally connected to the Pawtucket soccer stadium project.

Pryor negotiated the deal for the state after losing the Pawtucket Red Sox to Worcester and delayed his campaign to try to rescue it.

Diossa, whose state senator fiancé is pushing for more state assistance in her role as Pawtucket commerce chief, accused Pryor of not doing enough to convince his own board to accept less development for the same subsidy.

Recent history has proven treasurer to be a good stepping-stone office, first aiding Raimondo's rise and then, potentially, Seth Magaziner's move to Congress.

Unlike many Democratic primaries in Rhode Island, however, the winner here is no shoo-in in November.

Tidewater Landing: Future of Pawtucket soccer stadium development still in doubt after Commerce Board meets

James Lathrop, Republican challenger

They could face a real general election challenge from Republican James Lathrop, a North Kingstown finance director running on accounting chops and the kind of moderate Yankee conservatism feared to be extinct.

Lathrop's political inspiration growing up was U.S. Rep. Sam Gejdenson, a Democrat from his hometown of Bozrah, Conn.

A big fan of rugby, Lathrop wants to see a soccer stadium built in Pawtucket, but he has soured on the newest iteration of the Tidewater Landing financing plan drawn up by Pryor, which would only pay for the stadium part of the project.

"Like many projects of RI and RI Commerce, we were sold an unrealistic dream," he wrote in an email. "Once the project falls apart, we see a need for more local and state money or we see a stripped down project that in no ways resembles the original concept."

At least week's GOP Convention, Lathrop's speech was light on the partisan red meat his fellow candidates delivered at an event that at times sounded like a pre-victory party.

"The office requires technical knowledge and skills," Lathrop said. "Rhode Island needs a Treasurer that does more than talk about policy, ideas, and social programs that they will do. Rhode Island needs a Treasurer that can talk about what they have done. The Treasurer’s office should not be an on-the-job training program."

The "on-the-job training" line seemed aimed at Diossa, who three days earlier made an emotional pitch to Democratic delegates that emphasized a school-of-hard-knocks-style education in fiscal management as the mayor of Central Falls.

"I learned by taking a city from bankruptcy and the collapse of the pension, learned by going into communities and seeing families of five or more living in a 1-bedroom  apartment in the middle of a global pandemic," Diossa said. "It's not the type of education you get in the classroom, but the type of education that gives you the courage and ability to make hard decisions."

Since he left the mayor's office last year, Diossa worked at The Policy Lab at Brown University, but stepped down from that post in the spring to focus on the campaign.

Pryor, 50, the son of public school teachers, speaks quickly and never leaves out the fine print on topics like tax credits or financing gaps.

"As treasurer I will ensure that – not just when there is a lot of federal money flowing in and not just during the tough times – but all times, we support our small businesses and all businesses," he told Democratic convention goers. "We enable people to access the banking and credit union systems of our state and don't have to keep money under their mattresses. We are going to ensure we invest in affordable housing and our infrastructure."

In one sense, the treasurer primary could be another referendum on Raimondo's economic record in Rhode Island.

When Magaziner took over from Raimondo as treasurer in 2015, a big issue, apart from Raimondo's pension benefit cuts, was her decision to move pension assets into hedge funds.

In 2017, Magaziner sold off most of Raimondo's hedge fund investments, saying the fees they carried were too high to justify their lackluster performance.

And the three candidates running to replace him say, by and large, it was the right decision.

"The current investment mix appears to be serving the pension fund well," Pryor wrote in response to a Political Scene inquiry, although he was quick to credit "recent treasurers'" moves, and not just Magaziner, of "including more vigorous approaches when the fund was especially underperforming and more mainstream strategies (including the shift away from hedge funds and into more conventional assets) when the fund showed greater strength."

If elected, he said he would do a "deep dive," into the state's portfolio, but in general likes an investing strategy of low-fee index funds plus some assets to hedge against inflation.

Diossa was similarly quick to credit "each of my predecessors," but said "the pension fund has performed well under the “Back-to-Basics'' investment strategy that Treasurer Magaziner has championed."

"I know members of our retirement system don’t want to pay a dime more in fees to hedge fund billionaires and Wall Street’s big banks," Diossa said. "I don’t either. However, my investment strategy will never be driven by arbitrary limits on alternative investments like real estate, venture capital, or private equity."

Lathrop said Magaziner has had "good people" working for the pension and their departure is a concern.

"The Treasurer had other political aspirations beyond his current office and knew he needed to increase performance and the recent strong market and back to basic did this," Lathrop wrote. "When elected Treasurer I would change investments to generate more cash flow, minimize volatility and risk... Recession is coming, if not already here, and because of this I would reduce the current [Collateralized Loan Obligations] and equity option investment." 

In addition to managing the state's $10-billion pension fund and handing out unclaimed property checks, the treasurer also makes recommendations on proposed public borrowing.

Would the candidates support Providence issuing the proposed $515-million pension obligation bond?

Each said it would depend on the interest rate the city could get on the bond, with Diossa the most optimistic and Lathrop the most pessimistic.

"I have publicly supported the Pension Obligation Bond, and stand by that decision. As approved, I think there are appropriate safeguards to ensure taxpayers are protected," Diossa wrote. "But before Providence issues the bond, the city has to ensure it can get the right interest rate."

He didn't specify what rate would be too high to move ahead with.

"While I supported the enabling legislation that authorized the City to issue the bond under the right circumstances, it now appears that the actual circumstances are not ideal (and are expected to get worse)," Pryor wrote. "I would not recommend that the City proceed if the interest rate is anywhere close to the statutory cap (4.9%).

Lathrop said Providence is likely looking at 6% interest on taxable bonds and would not recommend issuing them.

"It is easy to place the Providence pension plan’s problems on the union and generous benefits, but the City must also step up and accept part of the responsibility for poor management of the assets," he wrote. "For me to support issuance of this bond I would need to see concessions from the union as to benefits and changes in who and how assets of the plan are managed." 

The vote

How did your local lawmaker or lobbyist vote on the treasurer endorsement? The Democratic Party, to their credit, released the rollcall after the convention to curious campaign watchers.

The vote among current members of the General Assembly was 14-12 for Diossa.

For Diossa: Reps. Edie Ajello, Karen Alzate, Nathan Biah, Grace Diaz, Susan Donovan, John Edwards, Joseph McNamara, William O'Brien and Evan Shanley; Sens. Sam Bell, Louis DiPalma, Maryellen Goodwin, Hannah Gallo and Ana Quezada.

For Pryor: Reps. Jacquelyn Baginski, Julie Casimiro, Stephen Casey, Arthur Corvese, Kathleen Fogarty, Brian Patrick Kennedy, Charlene Lima, Robert Philips, Patricia Serpa, June Speakman, Camille Vella-Wilkinson and Anastasia Williams.

Despite working with Pryor until a few weeks ago, Gov. Dan McKee voted for Diossa.

Magaziner did not vote. Nor did Nellie Gorbea or Peter Neronha.

The history of endorsements

But what do these endorsements mean anyway?

The party endorsement in the governor's race has historically been a good predictor of primary success, although not always.

During the string of Democratic successes from 1968 until the mid-1990s, the endorsed candidate was the winning candidate, according to a list of Democratic endorsements provided by the State Archives.

Democratic endorsees in that period included Frank Licht, Philip Noel, Joseph Garrahy and Bruce Sundlun. (Sundlun was the endorsed candidate and won the primary in 1986 when he lost the general election to the GOP's Ed DiPrete.)

However, in 1994, the party endorsement did not prevent the then-incumbent Sundlun from losing the primary to Myrth York, who then lost the general election to Lincoln Almond.

York got the party endorsement in 1998 and again won the primary before dropping the general election to Almond. The party didn't endorse anyone in 2002 before York – after beating Antonio Pires and then-Attorney General Sheldon Whitehouse in the primary – lost to Donald Carcieri.

In 2006 and 2010, Charlie Fogarty and Frank Caprio were the endorsed candidates and won their respective primaries before falling in the general.

The party sat out the 2014 race won by Raimondo, but endorsed her in 2018 when she saw off Matt Brown on the way to reelection.

Last Sunday McKee won the endorsement with 81 of 159 votes.

panderson@providencejournal.com

(401) 277-7384

On Twitter: @PatrickAnderso_

This article originally appeared on The Providence Journal: RI General treasurer's race James Diossa, Stefan Pryor, James Lathrop