PROVIDENCE, R.I. – The Rhode Island Public Expenditure Council released today an analysis of the seven ballot initiatives totaling $400 million to be considered by Rhode Island voters at a special election on March 2, 2021. The report looks at each bond referendum in terms of its return on investment, consistency with long-term state debt obligations, alignment with state policy goals, and the opportunity costs if investments are not approved.

“The evidence suggests that the state can afford the bonds being presented to the voters during this special election,” said RIPEC President and CEO Michael DiBiase. He continued, “bonds for higher education building, public recreation facilities, transportation, and the Davisville Port represent long-term public infrastructure investments. Housing and childcare 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 total proposed bonded indebtedness of $400 million is the largest total bond referenda ever presented to Rhode Island voters but the general treasurer determined that even higher levels of borrowing—the $496.8 million proposed by the governor in July—are reasonable and affordable at the current time. Moreover, Rhode Island has significantly reduced its debt burden over the past 20 years, and now ranks near the middle among states on key debt measures and in bond ratings.

Highlights of RIPEC’s findings:

• Question 1 – Higher Education Facilities – $107.3 M
  • Rhode Island historically has underinvested in its public higher education institutions in comparison to other states and the use of general obligation bonds to pay for capital improvements at state institutions has become an essential component of the state’s financial support of public higher education.

• Question 2 – Beach, Clean Water, and Green Bond – $74 M
  • Investments to finance improvements at state beaches, parks, and campgrounds comprise nearly half of the total bond amount, build on long-standing capital investment programs, and are supported by the state’s underinvestment in these recreational assets compared to other states.

• Question 3 – Housing and Community Opportunity – $65 M
  • Housing bonds have become the primary source of state funding to increase and preserve affordable housing in Rhode Island (this is the fourth housing bond put before votes since 2006) and the Building Homes Rhode Island Program has developed a successful track record of using bond funding to leverage larger sources of federal and private funding.
  • While meeting a critical need, this bond funding is not part of a larger state housing strategy, and its impact on the state’s housing challenges is relatively limited.
  • The community revitalization component of this bond is less targeted and does not have the same long history of success as does the housing component.

• Question 4 – Transportation Infrastructure State Match – $71.7 M
  • While a departure from the state’s more fiscally responsible approach over the past ten years of relying on current funding instead of state general obligation bonds for transportation, this bond is justified at this time, due to the loss of gas tax revenues and the reduction of Capital Plan dollars for transportation, as well as the availability of new federal funding (bond will match for $286.8 million in federal funding).

• Question 5 – Early Childhood Care and Education Capital Fund – $15 M
  • This new Facilities Fund would serve the important purpose of improving the quality of early childhood education and would respond to a demonstrated unmet need for capital improvements in pre-K and childcare facilities, but the program would be entirely new for DHS and is not necessarily part of a larger strategy.

• Question 6 – Cultural Arts and the Economy Grant Program and State Preservation Grants Program – $7 M
  • This bond is a smaller sequel to the $35 million bond approved by voters in 2014 and builds on existing grant programs in areas where the state provides little funding.

• Question 7 – Industrial Facilities Infrastructure – $60 M
  • Investment in the Port of Davisville fits the more traditional use of general obligation debt for long-term public infrastructure, is consistent with a larger QDC master plan, and builds upon a larger bond initiative approved in 2016, as well as other capital funds.
  • The site readiness program follows a smaller pilot program administered last year but lacks specifics and gives broad authority to determine how grant dollars will be allocated. Funding likely will result in significant benefits to communities and private developers; RIPEC therefore recommends a prescriptive and transparent process.

An Executive Summary is available here.