PROVIDENCE R.I. (November 2016) – On November 9, Rhode Island voters will be asked to consider seven ballot questions, five of which would authorize $364.7 million in additional debt costs, accounting for estimated interest and borrowing costs. Today, the Rhode Island Public Expenditure Council (RIPEC) released a report intended to assist voters as they consider these ballot initiatives. The report provides an updated look at the state’s FY 2017 budget and out-years, based on the preliminary FY 2016 closing, as well as Rhode Island’s current debt position. The purpose is to provide voters with information regarding the current financial position of the state and other related issues, which may be helpful when deciding whether to approve the referenda. The report also includes a summary of the 2016 ballot initiatives, and includes a set of questions for voter consideration.
Due to increased revenues and lower-than-anticipated expenditures, the state’s projected opening surplus for FY 2017 was increased by roughly $44 million. Despite this, the state continues to face significant deficits in the out-years as expenditure growth continues to outpace revenue growth. Furthermore, there are multiple risks to the out-year budget forecast, including the uncertain fiscal implications of competition from casino gaming in Massachusetts; inflation, utilization and technological changes in medical services; demographic shifts associated with an aging population; and ongoing concerns regarding the implementation of the Affordable Care Act. Unless Rhode Island’s structural deficit is resolved, the state will continue to face difficult decisions regarding investments, funding requirements and short-term financial fixes.
The report includes a summary and list of questions to consider regarding the two constitution-related proposals that will be presented to voters on the November ballot. The first question asks voters to approve the licensing of a Twin River casino in Tiverton, replacing Newport Grand. The second question asks voters to approve a constitutional amendment that would restore the ability of the state’s Ethics Commission to oversee ethics transgressions by members of the General Assembly.
The report also includes a summary and list of questions to consider regarding the five bond proposals that will be presented to voters in November. If approved, the five bond proposals combined would authorize the state to borrow a total of $227.5 million (roughly $364.7 million in total borrowing costs) for capital projects. “It is necessary to consider the five bond referenda proposals in light of the state’s structural deficit, overall debt position, and the fiscal implications of bond repayment,” remarked John C. Simmons, Executive Director of RIPEC. “Voters should also consider to what extent public investment in the proposed projects is likely to strengthen the state’s economy overall.”
Capital investments provide infrastructure improvements, and help boost the state’s economy. However, how the state funds these projects – particularly with regard to increased debt – is an important consideration. Although the state has made significant improvements in debt management in recent years, it still ranks in the top third of the country for debt per capita and as a share of personal income. Ultimately, voters must weigh the benefits of capital investment against the long-term costs, especially given the state’s fiscal position.
RIPEC has traditionally not taken positions on bond referenda questions. However, RIPEC encourages taxpayers to consider the merit of the proposals themselves, in addition to whether bond financing is an appropriate funding mechanism.
