The following is an extended version of an interview that appeared in print on February 7, 2014. It has been edited for length and clarity.
The prolific Ted Nesi is a reporter, journalist, and blogger for WPRI, maintaining one of the most widely read blogs in the state—Nesi’s Notes. His writing on Rhode Island’s economy and politics is regularly cited by major national media outlets such as The New York Times, The Washington Post, and CNN. In 2011 Politico named him one of four top bloggers to watch.
That year Nesi made a name for himself with his analyses of General Treasurer Gina Raimondo’s highly controversial cuts in pension benefits for public-sector workers and investment of state money in hedge funds, which can carry high risks. Nesi garnered both positive attention and criticism: Ted Seidle at Forbes called him “a reporter friendly to [Raimondo’s] cause.” Since then he’s won praise for his coverage of the collapse of former-athlete Curt Schilling’s video game company, 38 Studios, which received a $75 million loan guarantee from the state. We met on February 1, a few hours after he finished his 5AM blog post, to talk about the state of the media, the economy, politics, and his career. In person Nesi is energetic and talkative. He posted a tweet less than five minutes after we said goodbye.
The College Hill Independent: You’ve been in Providence since 2008 as a reporter. What brought you to the city?
Ted Nesi: I’m really from around here in the sense that I’m from Attleboro, Massachusetts. And it’s all the same metropolitan area. When I got out of college, I got a job at the local paper in Attleboro, but I didn’t really want to live in Attleboro, and the closest, easiest city to live in was Providence. It’s only 20 minutes back into Attleboro, so I got an apartment down here.
The Indy: Providence and Rhode Island seem to be a pretty strange political scene. It’s small, self-contained, and everyone knows each other. The journalist Mike Stanton once called it “incestuous.” Did you have any particular interest in Providence as this unique political environment?
TN: To be honest, no. For me, I ended up here very much because of location. It made sense for me to be down here and then I once I was here reporting on the place, it’s a fascinating little place and you have access to the people you’re reporting on much more closely than you might in another market like Boston, where there are so many reporters around. But it is a fascinating place. There’s not a lot of party competition, you know. The Democrats are so dominant, but that just means you have to look a little harder because there’s all these cleavages within the Democratic Party. I’ve stayed, probably, because it’s interesting.
The Indy: In this small, self-contained, media-political environment here in Providence, it seems like a lot of the journalists know each other. And the politicians also know each other pretty well. I read an interview you did with Treasurer Raimondo in which she called you by your first name. What kind of relationship do you try to have with elected officials?
TN: I think about that sometimes. I think it’s dangerous for reporters to be too close to the people they’re covering. And yet at the same time we’re all human beings and it’s natural to want to have at least a decent working relationship with people you have to talk to frequently and deal with. Maybe I wouldn’t say I struggle with that, but I would say I try to find a balance by keeping a healthy distance. But inevitably over time and in a place like this where it is so small and everyone knows each other, there’s a familiarity that grows between the reporters and the people they cover. Gina may call me “Ted,” but I would always say Treasurer Raimondo, which is one part of it. Also, that’s just the way they speak. And even sometimes they say our names to seem friendly even if they’re saying something nasty. I’ve gotten that too. It doesn’t really feel like we’re friends when they say it that way. I try to have a life outside of this very all-consuming political media sphere. Especially with Twitter now, you never unplug in a way, unless you really consciously try to, and I think sometimes you get weary of it.
I think I get a long pretty well with the other reporters. I would say I’m especially close to Tim White, and also Dan McGowan because we work directly together. Ian Donnis at Rhode Island Public Radio has been a great advocate and mentor to me as well as Charlie Baxton, a former ProJo reporter. I also think that’s a product of Twitter, because we’re all basically in a chat room all day.
The Indy: Do you think having this small community of people all talking to each other constantly informs the tenor of political discourse?
TN: Yes and no. I don’t actually think that’s exclusive to Rhode Island. Sometimes the things that consume the tweeting media types were not things that the average voter cared about. If Twitter makes us go down the rabbit hole or makes us cover things that aren’t important, that’s a negative.
The other side is I think it can be a great corrective because if someone makes an error, you find out quickly because of Twitter. I think we sometimes build on each other’s stories, you know, especially when there’s so much fast-paced news happening like during the final days of the General Assembly session. It’s actually a weapon for the reporters against efforts to spin us or move things so quickly we can’t keep track, because we can all keep in touch. So I think overall on balance it’s a good thing. But there’s good and bad to all developments.
The Indy: You are a print journalist by training, writing an online blog for a television station’s website, which is pretty unusual. This is a new hybrid platform that WPRI has going on. Where do you see the Rhode Island political media industry going in the next few years?
TN: I don’t think anyone knows because of the economics of it all. I think it’s going to take a number of years for it to shake out about which organizations have the financial stability to either maintain what they have or grow. At WPRI there are really only two people in the building who are there in a specifically funky way: Dan [McGowan] and me. The reason we’re there is because there’s a cultural thing at WPRI where we do feel strongly that you have to be on whatever screen the reader or viewer is on. If someone wants a TV news report, we do a good job there. If they want a long Saturday morning column about politics and the economy, they can get that from us. The more places we are and the more we are delivering the news where people want it, the better we are.
That said, it all depends on if there’s advertising to support it. Local TV, luckily, has been more stable than the newspaper industry. I wonder all the time, in a few years, how many people will be at the [Providence] Journal? Who will work at the other places? Where will people be getting their news? I just think it’s very cloudy, especially for local news. National news coverage is going to be fine. There have never been more ways to get national news. What I worry is, “Will there be the same level of resources available at a level like at a state level in Rhode Island, let alone in a local community?” That’s why I’m so appreciative of how WPRI created my job because they’re taking some of the profits from TV news, which is similar to how we’ve always done TV news, and investing it in long-form reporting, and more detailed reporting. And I think we’re going to need that. I worry that the local markets are going to be left behind a bit.
The Indy: Your blog is so frequently updated. Is the future of news in hourly updates?
TN: I actually have been struggling in the last year, especially as I have more responsibilities on TV, to keep my pace of writing up online. You do run out of hours in the day and I get tired. If you look back at my early days at WPRI when I wasn’t doing so much on television I updated a lot more than I do now. I think that we—reporters, journalists, media outlets—need to be there when people want us to be. That probably sounds corny or obvious, but people want their news regularly updated. The struggle now, for a lot of us, is that it can be hard to do high-quality content at the same pace that the world demands in 2014.
I think one of the reasons Channel 12 created my job in 2010 is that there was an opening for a really fast-paced non-traditional look at political and business news. Not waiting for the evening news, not waiting to read a full story. All news organizations have to really think hard about how to use their resources in new ways to be there when people want them to be there. And it’s not easy. I wouldn’t downplay that. Most of us are filing stories or articles to multiple places. The Journal writers, they’re at a daily newspaper, but they’re expected to break news at the same pace as me. If there’s a political development, Journal reporters are expected to throw it up on the Journal’s blog that moment when it happens and then have a story for the next day’s paper. I think that the pace is something that everybody is struggling with. I certainly am. I think that reporters are going to be talking about pace a lot in the next five, ten years.
The Indy: It’s been a little less than two years since 38 Studios went bankrupt. But the state’s lawsuit against the company is still ongoing, and it was only two days ago that the Senate approved legislation to encourage an out-of-court settlement. Are we still feeling the economic effects of the loan guarantee debacle?
TN: Economically, not directly. Some people lost their jobs, which is very unfortunate, but 38 Studios was not CVS-Caremark with 5,000 jobs, or Lifespan with 10,000. It was a fairly small enterprise. And in terms of the amount of money coming out of the state, so far we’ve only shelled out $2.5 million. So I don’t think economically the effects have been that huge directly.
Indirectly, I would say the impact of 38 Studios has been pretty devastating for Rhode Island, because of the extraordinary damage it did to public trust in public officials. It’s really frozen economic policy in Rhode Island in place for two years. Everything is a reaction to 38 Studios. Every possible idea is another 38 Studios for its opponents. No one wants to do anything too crazy. The state government is not trusted to do big things, to think big. I think that's very troublesome. I don't think it's going to change so long as people feel that there's still something being hidden about what happened.
I think, at this point, we know that what happened with 38 Studios was mostly incompetence. It's possible that if you have a change over in leaders and you get a bunch of people in who aren't close to the deal at all, maybe public trust will be restored. There will be a new governor next year. No one in the campaign was a strong supporter of it. But the Assembly still is run by two leaders who backed the deal, [Gordon] Fox and [M. Teresa] Paiva-Weed.
The Indy: How exactly is 38 Studios going to play out in the gubernatorial campaign? It's not like one of the candidates is on one side of the issue and another is on the other side.
TN: Where you'll see it is on the question of paying back the bonds. We're already seeing it a little with Gina Raimondo in the democratic primary. Raimondo and [Angel] Taveras have both said, “I hate it but we have to pay it.” Clay Pell said, “No, I wouldn't put the money in the budget. I don't think we've seen why we have to pay it.” I think that's going to be a live issue. I think the average Rhode Islander would like to not pay that $90 million back.
It's been interesting that the Republican Party in Rhode Island has been strongly against paying it. In a caricature of politics, you'd expect the conservative party to be the one that's looking out for financial interests, and that's clearly not the case here. It's a live issue. It could have impacts further down the ballot.
The General Assembly is going to be asked in June or so to vote on whether to put $12.5 million in taxpayer money and send it out the door to pay those bonds. Their opponents can go out there and say, “your state lawmaker just voted $12.5 million to pay for their mistake on 38 Studios, I would never have done that.” I don't know how it will play out. I try not to make too many predictions as a reporter because they're always wrong. But I do think it is something to watch closely because it could be a live controversy all through the year.
The Indy: At the risk of asking an obvious question, why should RI pay the $90 million? What would that mean if it didn’t?
TN: I wouldn't say it’s obvious at all. I think it’s a hotly contested question. You have a mix of people. [Lincoln] Chafee, Raimondo, Taveras, people from Wall Street saying, “Look, if you default on this bond, it will damage the state's credit rating, it will make us look bad, it will make it more expensive for us to borrow.” What it comes down to is what will it do to the state’s credit rating? If we don't pay the bond will our interest rate shoot up so much that we'll pay more than $90 million in extra interest costs?
The alternative viewpoint is that this is a special kind of bond, called a moral obligation bond, and therefore the state never promised to pay it back—the state promised to consider paying it back. These bond holders got a higher interest rate to compensate them for the risk that went with the bond. “Here's the risk, it went bust, we're not going to pay you, sorry.” Maybe these people saying to pay it are just crying wolf, and they're either blindly scared of Wall Street or worse, protecting these bond holders.
Those are the two sides of the equation. It’s very hard to nail down what would happen if we defaulted.
The Indy: Earlier this month, House Majority Leader Nicholas Mattiello was on Newsmakers talking about reducing tax rates—specifically the sales tax rate. But Rhode Island's tax rate is less than one percentage point higher than those of our neighbors Massachusetts and Connecticut and the proposed reductions would just bring them in line with those states. The stakes seem low. Do you see this as something to be taken seriously in upcoming legislative session?
TN: Taxes are definitely discussed a lot. I wouldn’t focus solely on the sales tax. I've heard a lot more about lowering the corporate tax rate, and raising how much of an estate is exempt from the estate tax. Taxes are another issue in RI where it can be hard to separate what we feel and believe from what the heart of the matter is about what the economic effects would be. Rhode Island does have a higher sales tax. It’s only a percentage point higher, but it is higher. Though, on the other side of it, we don't put the sales [tax] on as many services as other states. The corporate tax is higher here. But again, how big an impact does a change in the corporate tax have—I leave to the economists. Our estate tax exemption is one of the lower ones and then, of course, the property taxes are quite high, which is true across New England. But here on the East Side of Providence, these people have gotten whacked with a heavy bill because of Providence's financial problems. I think the sense is that these things add up.
The Indy: But hasn't the city issued 100 tax stabilization agreements in the past 30 years that effectively freeze raises on property taxes? So as property values go up in the city, a lot of people aren't paying for that increase in property values.
TN: Well, 100, but how many properties are there [in the city]? What percentage is that? A hundred sounds like a big number, but it's not really that many and those stabilizations don't go to the average homeowner. They go to large developments. In theory, good tax policy means you try to keep things level across everybody in the economy so that you're not distorting things too much and handing out favors.
We have the highest commercial property tax rate in Providence of any large city in the country. It’s even higher than Detroit. It is true that some property owners are paying less because of special deals with the city. On the other hand, if some people are paying less than others, it means those guys who don’t have a deal are subsidizing the ones who do by paying a higher tax rate.
The Indy: The issue of property taxes brings to mind the fact that 40 percent of the real estate value in Providence is held by nonprofit tax exempt institutions: universities, cultural institutions, religious organizations. Some people say it puts a huge burden on the city to have such a large percentage of taxable assets off the table. You wrote once about Brown paying its fair share. What do you think needs to happen in terms of nonprofit institutions contributing to the local economy in a way that benefits Providence but also doesn’t dramatically reduce cultural or educational resources in the city?
TN: When I wrote about Brown, it was before the most recent deal with the city. There’s no doubt that Brown has stepped up, as have the other institutions. But it’s a very big policy question. Why are these places tax exempt? Well, because the government made a decision that these places have a special status and therefore should not be subject to taxation in the same way as other places. The struggle is that when those strategies were put in place, the expectation was that they would be a relatively small percentage of the overall tax base. Brown was smaller, RISD was smaller, the hospitals were smaller.
I would say the issue for the city is not so much on the property taxes that are or aren’t paid by Brown, or the colleges and hospitals, but that they might be missing the bigger issue. I’ve written a lot about “eds and meds,” which the city has been talking about for ages as the engine of growth. I think that’s going to be a challenging thing for the next ten, twenty years. There’s so much pressure on colleges and hospitals to hold down costs. So on the one hand we really want to hold down costs at the colleges and hospitals, and at the same time gallop forward with more growth. I don’t see how they do both. They either bring in more money so they can invest it in that kind of growth, or they hold down costs, and stay more affordable—which means they don’t grow as much. If that’s Providence’s whole plan—that Brown and the hospitals are going to gallop forward and drive growth—I’m not sure that’s really in the cards right now.
The Indy: The last big buzzword in the economy in Rhode Island is pension funds. Raimondo is running for governor. She’s famous for having invested a larger percentage of pension funds in private equity and hedge funds. Alternative investments—
TN: Hedge funds. Private equity we’ve been in for many years. Hedge funds are what’s new.
The Indy: The category of alternative investments overall has risen. She’s drawn down the amount held in money markets and domestic and international equity. Do you think that her policies have been good for the state? I know that’s a very politically charged question.
TN: I think that would depend on how you define good for the state. If I’m a retiree who lives in the state, my view is that taking my COLA [Cost-of-Living Adjustment] away is not good for the state. But if you’re someone who thinks that the state couldn’t afford $3 billion of pension liabilities you’d say [Raimondo’s policies] have been good—or at least that we’re going in the right direction.
I think the way Raimondo manages the money is a separate issue from the question of the financial health of the pension fund, and how big benefits should be. I’ve written a few times that she could have put all that money [into hedge funds] without changing a dime in terms of benefit levels. It happens that she did both. There’s a narrative about her and her ties to Wall Street, but there’s a reason that that pension law passed so overwhelmingly. There was a very public campaign. There was a lot of pressure on lawmakers to vote for it.
The other side is Rhode Island did have one of the most underfunded pensions in the country. It has fairly high tax rates, so there’s not a lot of room to increase how much revenue was coming into the general fund. A lot of unmet needs: bridge repair, education funding, Medicaid. And so I think it’s only natural that, just as they’re always looking at how to cut back on Medicaid they looked at how to cut that down. Now, is that constitutional? Is it even allowed? That’s why there’s a court case going on and if it’s not [legal] then the state needs to go back to plan B. But there’s not really a plan B. I don’t know what the state’s going to do at that point.
It’s especially hard because an individual plans their life expecting a certain amount of income in retirement that’s promised to them. I mean, look at the 38 Studios promise. We take very seriously the contract with the bondholders for 38 Studios in a case where, as I’ve said, legally we don’t even have to pay. Well we broke the promise to the pensioners. And you can make the case, as Raimondo did, that that was a serious step, but that we had to take it. But no one should dispute that it was a serious, unprecedented step.
The thing that, if nothing else, people should take out of the pension discussions in Rhode Island is how important it is to actually put money in the pension fund when you promise the benefit.
The Indy: Do you think the Democratic primary for Governor of Rhode Island could be a referendum on pension reform?
TN: To an extent, yeah. Raimondo wants it to be a referendum on pension polices if, in the end, the voters think that was the right decision. Taveras wants it to be one if they don’t like it. So everyone is okay with that if they are on the winning side of the argument.
At the time the law passed there was roughly 60 percent support for it. Obviously there was strong opposition from the people who were going to be directly affected. You’d expect a Democratic primary to have more people who were affected—labor unions members, others. So it could be more controversial in that group than it is in the general population.
At the same time, I think there will also be a debate about Angel Taveras’s stewardship of Providence. You know the situation in the city right now. There’s a reason Providence mayors rarely are able to move up to higher office. It’s very difficult to run a city in financial crisis. There’s a lot of baggage that comes with that.
Some people will try to make it a referendum on the pension law. [But] I think you’re less likely to see it as a referendum on the law [itself] because Raimondo can just say all the Democrats in the Assembly supported it. I think it’s more a referendum on the hedge fund thing you talked about before. The idea of her being the puppet of high finance.
You can see Angel Taveras’s campaign already pounding away on that and her campaign trying to get away from it. That I think is more damaging to her than a debate about the pension law cuts because she already won the debate about the pension law once, in 2011. She’s never won a debate about whether hedge funds should get a billion dollars of the pension fund.
The Indy: Last night you broke a story about $100,000 from a former Enron executive in Texas coming into the state of Rhode Island to support Raimondo’s campaign. Ted Seidle at Forbes has said that Raimondo is leading this charge of state treasurers putting pension funds into hedge funds and the fact that she’s drawing donors from Texas, from Pennsylvania, from Florida would seem a bit hard to explain unless it’s because of the national significance of her policy.
TN: Her celebrity nationally on this stuff has come from the law, not the investment decisions. She’s gotten so many positive write-ups in the New York Times, Financial Times, Wall Street Journal for getting that law through in a Democratic state as a Democrat. And I think a lot of these finance guys are always pushing for lower federal deficits. They’re looking for these issues of “fiscal rectitude.” She’s their kind of person. She comes out of finance, looked at the numbers, and wasn’t ideological. Said she wasn’t. She also has quite a network. Harvard, Yale, Oxford, finance. Her husband’s roommate was Corey Booker. Of course Clay Pell’s not exactly an outsider to America’s elite either.
The Indy: Are there any other really big issues coming up for this election?
TN: Sure, I think education is going to be a bigger issue than people think. Clay Pell is very close to the teachers’ unions who are very opposed to the thrust of Rhode Island’s education policy in recent years. Part of why Pell is getting their backing is that Gina Raimondo and Angel Taveras aren’t good candidates for them. They’re both very much new school democrats on education policy who are more in tune with the charter school, standardized testing, “Obama race to the top” point of view on that than the old fashioned teachers’ union approach to it, which is to let the teachers do their job. I think that’s going to be a real issue and an interesting one…
I just think in the end nothing comes close to the jobs crisis here. People are so depressed about it. They can feel it. People don’t need to see the stats that I write about to know that they aren’t seeing a lot of job openings.
And the economy is what the candidates are talking about, too. So I think it’s going to be about the fight over whose prescriptions are right for that and who wins the narrative about being able to improve that. Especially between the Democrats who will say, “If we can invest strategically in this and that we’ll get in the right direction.” And the Republicans who will say, “We just have a bloated government in Rhode Island and that’s a huge part of our issue.”
The Indy: Which brings me to my next question: We’ve been talking a lot about the Democratic primary candidates, but four of the last five gubernatorial elections in the state have been won by Republicans and the other was won by a former Republican. Yet there’s a general sense that this is a “blue” state. The Democrats are in no danger of losing the House or Senate. So, in what way do Fung or Block have a chance at the governor’s seat?
TN: I think the history you just pointed to goes to the heart of it. Rhode Islanders may always go for the Democratic presidential candidate and almost always send a Democrat to congress, but clearly they have no problem pulling the lever for a Republican candidate for governor. I think it’s an older kind of Democratic Party that’s more like the classic New Deal Coalition.
And about the General Assembly, one Republican [in the General Assembly] once said to me, “Yes. You have 69 Democrats in the House out of 75 members, but General Assembly elections are very, very personal.” They’re so much about the individual. But the vast majority of the winning individuals turn out to be Democrats. I think it’s a “success breeds success” effect. The more the Democrats win those elections the more they know how to win those elections. And they expect to win so they get candidates who want to run.
On the governor’s race, people are very open to having some balance against the General Assembly. The things that make Republicans unpopular here on a national level—social issues, stuff about how the federal government operates, social security and Medicare—those aren’t issues on a state level. I think that gives Republicans an advantage at least over their national peers. I think Fung and Block, if they can run good campaigns and depending on the outcome of the Democratic primary would both have a shot to send another Republican back there.
But let’s say one of them wins, what could he do, though? Governor Carcieri fought, fought, fought with the General Assembly for years and, while he certainly enacted plenty of policies, policy in Rhode Island is so based on what the General Assembly wants. I sometimes wonder how much it matters who the governor is. Of course it matters, but sometimes I think we overestimate the importance who the governor is when in fact the General Assembly just does what it wants and the governor just has to deal with it a lot of the time.
The Indy: Do you have any plans to endorse any of the candidates?
TN: No, I don’t endorse.
The Indy: You’ve built up quite a brand as a reporter. You have name recognition in the state. People who are tuned in to Rhode Island politics know who you are. What are your plans for the future? Are you going to leverage your name recognition into a broader media platform, or do you have political aspirations of your own in elected office?
TN: In college I thought I wanted to go into politics. I clearly love politics. But I just found that I love to write. I love to analyze. I can change my mind five times in a day. Politicians change their minds once and get in trouble. But my whole job is to try to follow the facts as best I can. So I don’t see myself running for office.
In terms of my future career as a reporter, I’d go back to what we talked about first—the uncertainty in the industry. For me as a young reporter, you don’t know where the jobs are going to be. I never would have said a couple of years ago, “I’ll probably be a TV station’s political blogger.” That wasn’t a job that existed and I had no idea it would be there for me. I’ll certainly be in Rhode Island for a while yet because I work for Channel 12. I’m not in a rush to leave RI. I do believe in the importance of state level news. Everyone lives in the state and the state has a lot of impact on people, and sometimes state governments need more scrutiny than the federal government because the federal government gets plenty of scrutiny already. At Channel 12, I have a lot of freedom to go where there’s interesting news happening. At my age I’m very grateful for that and I enjoy it. I try not to think about the future too much.
The Indy: Anything else?
TN: I do work for a TV station. And when it snows, I cover snow.