Mon April 5, 2010
State has highest bonded indebtedness
By Scott Mackay
Providence, RI –
Our state's bonded debt has ballooned from about $1.3 billion in 2002, Governor Lincoln Almond's last year in office, to roughly $2 billion in the fiscal year that begins this July.
Nobody at the State House or in the state's business community ever talks about this burden on our state's taxpayers. It is so much easier to blame employee pensions and health care benefits for bankrupting the state.
For the most part the state's bonded debt has bought things that most citizens like and appreciate: New roads and bridges, including the relocation of Route 195 through Providence and the gleaming new IWAY bridge. Rail and road improvements designed to attract business to Quonset Point. New buildings at the University of Rhode Island and Rhode Island College.
But these bright shiny objects come at a price that politicians don't like to talk about. The state, like too many of its citizens, has been piling too much on its credit card and now the interest payments are soaring.
None of the special interests complain because they all benefit in a big way from this spending. The building trade unions get the jobs, which often come with lucrative overtime. The construction companies get the contracts and the inevitable change orders, which drive up costs, and, of course, profits.
The lobbyists and p.r. flacks get their cuts as they maneuver the bond issues through the State House sausage machine. The lawyers and bankers in their glassed-in offices overlooking downtown get the bond counsel and underwriting business.
And the politicians rarely say anything about all this because it allows them to camouflage the true cost of government.
The pols do have a dilemma here, says Gary Sasse, who recently left the Carcieri Administration as director of administration. Some of this spending is needed, Sasse says, to keep Rhode Island's economy competitive with our neighboring states of Connecticut and Massachusetts. "Investing in education and transportation infrastructure is necessary to keep our economy competitive....it does cost money," says Sasse.
The one canary in this coal mine over the years has been Tom Sqouros, whose web site columns and book "The Ten Things You Don't Know about Rhode Island" call for transparency and prudence in our bonded debt.
Sqouros, who is now running for general treasurer, says the state would own up to this spending. Rhode Island has even been borrowing the money needed to match federal dollars on such big highway projects as the new 195 IWAY. This akin to borrowing to pay down the interest on a credit card.
This could have been avoided if the governor and General Assembly had, say, raised gasoline taxes to pay for new roads. They didn't, so in the next year, state government will spend nearly 8 percent of the general fund budget just to pay interest on this debt. That's $200 million or so that can't be used for schools, economic development or aid to cities and towns.
Last week's floods saw Rhode Islanders at their best. The citizens of our little state pulled together to help each other out; the loaned sump pump became a state symbol. People at neighborhood pubs and diners took in donations to help neighbors overwhelmed by high water. Above all, civility and honest ruled the day; there were no reports of post-Katrina style lawlessness or looting.
Now is a good time for our politicians to show similar honesty when they spend our money.