Is water part of the answer to the fiscal woes of Providence?
Legislation introduced this month in the General Assembly proposes creating a statewide water authority to centralize oversight and operations of the 490 public water-supply systems in Rhode Island.
The legislation, introduced by Rep. Scott A. Slater, D-Providence, would establish the so-called “R.I. Cooperative Water Authority,” which could make purchase and lease agreements with local water-supply authorities to sell water to Rhode Island customers.
The bill does not compel local authorities to join, but it does include language allowing participating suppliers to earmark proceeds for local pension or retirement systems.
A similar bill, including the pension language, was introduced in 2013, but failed to garner support.
Slater wanted the pension language in the new bill to allow Providence to negotiate a deal that would funnel money from its water system to its woefully underfunded pension and other post-employment benefits retirement system. The latter combined total is at least $2 billion in the capital city.
“The overall obligation is a concern for me, and it’s always something I would love to see straightened out,” Slater said.
Providence likely stands to benefit the most financially from the bill, as the city controls most of the state’s potable water and serves about 60 percent of Rhode Islanders. It now provides water to retail and wholesale customers in at least 10 other communities through the Providence Water Supply Board. A statewide authority, however, would reduce municipal administrative and overhead costs for the city. It would also allow for new revenue through leasing deals with the statewide authority.
Last year, The National Resource Network, a coalition of nationwide consultants, submitted a report recommending Providence monetize its water system through either a lease or sale agreement, and to earmark any new revenue to fund retiree benefits.
“Any upfront payment through an asset sale or lease would help the city reduce its significant retiree liabilities,” according to the report.
The report estimated the net assets of the Providence Water Supply Board totaled at least $372 million.
“Many local governments have found they can stabilize long-term liabilities or other pressures by monetizing city assets,” according to NRN.
Providence Mayor Jorge O. Elorza backs the legislation, though he has yet to commit to the idea of funneling proceeds toward the city’s retirement system.
Because the bill was introduced relatively late in the legislative session, it will need the backing of House Speaker Nicholas A. Mattiello, who is “not familiar” with it, said spokesman Larry Berman. “He’s reserving any comment on it until it gets reviewed.”
