That doesn't look right. Let's do a quick run down. HO- reacts with a RCOOH to give H2O and RCOO-. RCOO- reacts with RCH2Cl to give RCOOCH2R and Cl-. In each reaction, the product is a weaker base than the starting material. Why should your suggested last step, lactone + H2O -> HOCH2CH2CH2COO- + H3O+, reverse this trend?