RIPEC supports borrowing in upcoming bond referenda

PROVIDENCE – The Rhode Island Public Expenditure Council supports borrowing for the seven bond initiatives that will be considered by voters in a special election on March 2, the council said in analysis released Friday.

In total, the proposed bonds combine for $400 million in debt, the largest bond referenda in the state to date.

“The evidence suggests that the state can afford the bonds being presented to them during this special election,” said Rhode Island Public Expenditure Council CEO and President Michael DiBiase. “Bonds for higher education building, public recreation facilities, transportation and the Davisville Port represent long-term public infrastructure investments. Housing and child care facilities bonds are needed and worthwhile investments, however, state leaders must ensure that they are part of a larger strategy for investment and improvement.”

The report noted that Rhode Island’s ratio of debt service to revenues was 5.1%, ranking No. 18 for highest in the country, and above the national average of 4.2%. In relationship to other New England states, Rhode Island had the third-highest debt ratio behind Massachusetts and Connecticut, which had the second- and first-highest ratios, respectively, in the nation. Rhode Island’s “AA” debt rating from Standard & Poors is equivalent to that of Massachusetts, Maine and New Hampshire and more favorable than Connecticut, RIPEC said.

The proposed debt also falls under the state’s debt affordability guidelines.

With interest, the combined cost of all bonds in the referenda would cost $641.9 million.

The report said that RIPEC supports the proposed bonds due to the “historically low interest rates currently available for state general obligation debt,” adding that given the impact of the pandemic, “capital investment through borrowing is one of the few levers available to help accelerate the recovery of the state’s economy.” 

The bond referenda included in the special election are as follows:

• Question 1 is a vote to approve or reject $107.3 million for improvements to higher education facilities, including: $57.3 million for the University of Rhode Island Fine Arts Center; $38 million for the Rhode Island College Clarke Science Building renovation; and $12 million for the Community College of Rhode Island renovation and modernization.
• Question 2 is a vote to approve or reject $74 million for the beach, clean water and green bond, including: $33 million for state beaches, parks and campgrounds; $15 million for clean water and drinking water; $7 million for municipal resiliency; $6 million for Providence River dredging; $4 million for the I-195 Park; $4 million for local recreation projects; $3 million for natural and working lands; and $2 million for the Woonasquatucket River watershed.
• Question 3 is a vote to approve or reject $65 million for increasing the availability of affordable housing and support for community revitalization through the redevelopment of existing structures, new construction and property acquisition.
• Question 4 is a vote to approve or reject $71.7 million for the transportation infrastructure state match of federal funds, while providing direct funding for needed and planned improvements to the state’s transportation infrastructure, including ports, highways, roads and bridges.
• Question 5 is a vote to approve or reject $15 million for the Early Childhood Care and Education Capital Fund, for physical improvements and development of licensed early childhood care and education facilities.
• Question 6 is a vote to approve or reject $7 million to be allocated for the Cultural Arts and the Economy Grant Program, including: $2.5 million for Trinity Repertory Company; $2 million for grants to be allocated by the Rhode Island State Council on the Arts; $1.5 million for the Rhode Island Philharmonic; and $1 million for the State Preservation Grants Program.
• Question 7 is a vote to approve or reject $60 million for industrial facilities infrastructure improvements, including $40 million for industrial site development and $20 million for Port of Davisville infrastructure at Quonset.