Stalled AIG Settlement Could Deepen R.I. Budget Deficit

May 11, 2007

Rhode Island’s estimated budget deficit could grow by almost $100 million because of a stalled settlement with an insurer accused of deceptive business practices, state officials warn.

As part of a massive settlement reached last year, American International Group Inc. agreed to pay states and other private companies about $1.64 billion to settle accusations it used deceptive accounting practices that misled investors and regulators.

But not all parties to the settlement are willing to sign, meaning Rhode Island’s slice of the profits will be delayed for the foreseeable future, Joseph Torti III, the state’s insurance commissioner, said.

Expecting the money, Republican Gov. Don Carcieri included it in a proposed budget that attempts to close an estimated $360 million budget deficit.

“Obviously, it’s not what I wanted to hear,” said state Rep. Steven Costantino, the Democratic chairman of the House Finance Committee. “If you can’t get it, you can’t get it. We still have to balance the budget.”

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Information from: The Providence Journal, http://www.projo.com/

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