PROVIDENCE – Providence voters will weigh in Tuesday on the city’s pitch to borrow half a billion dollars to shore up its beleaguered pension fund.
While voters aren’t the final arbiter of the $515 million pension obligation bond, the outcome of the special election is a key provision of the set of recommended conditions surrounding the borrowing plan, as first introduced by a working group of community representatives and financial experts.
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The ballot measure is non-binding, meaning that even if a majority of voters say “yes” to the bond, it’s not a guarantee. The Rhode Island Senate must approve enabling legislation – which passed in the R.I. House on June 1 – for the city to move forward.
Market conditions must also stay favorable, with a 4.9% cap in the interest rate at which the city can borrow, per the terms of the bill approved by the House.
Proponents, including all three city mayoral candidates, have framed the proposal as the best – and only – way to make a meaningful dent in the city’s unfunded pension liability, which has swelled to $1.3 billion. Annual payments are also increasing faster than city revenue, threatening to siphon away funds from critical services if nothing else is done, according to the Providence Pension Fund Working Group report.
Still, opponents, including some lawmakers, have said the bond is too risky amid a volatile market, noting the disastrous effects of pension obligation bonds gone wrong in other cities, including Woonsocket. During discussion on the House floor June 1, some representatives also criticized the timing of the special election which they said would not generate the turnout needed to truly show the will of the electorate.
As of Monday, just over 400 voters had already cast their ballots during early voting, with another 337 mail-in ballots turned in, according to the R.I. Board of Elections. There are 123,000 registered city voters.
Polls close at 8 p.m. Tuesday.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
HOPEfully, reason will prevail and this POB fiasco will be voted down.