Rhode Island Senate Finance Committee Chairman Daniel Da Ponte, D-East Providence, filed a bill that would require a limit for total bonded debt for state government and that of all the quasi-public entities and the municipalities.
Under the legislation, the Public Finance Management Board would review the aggregate debt totals and recommend a debt limit to the governor and General Assembly periodically. The General Assembly would need to ratify it.
No category of such debt would be allowed if the issuance would exceed the debt limit cap, according to Da Ponte, whose similar bill last year was held for further study.
“I am increasingly concerned about the levels of government debt in Rhode Island,” said Da Ponte, who said the most recent data available pegs Rhode Island’s total outstanding and authorized state and local debt at $6.4 billion, “and various indices rank us near the bottom nationally.”
That converts to more than $12,800 per taxpayer, according to Da Ponte. In the past two years alone, he said, the state and the voters have authorized $452 million of additional debt, not including the amounts owed for unfunded state and local pension and benefit liabilities.
“The problem is that there is always an attractive or necessary reason to issue new debt. Whether it is to put new boilers in schools, roads and bridges, or continue the Narragansett Bay Commission’s sewer project, there are always good reasons,” he said. “I have voted with my fellow office holders, both state and local, for these bonds, as have the voters. However, no one is looking at the totals in any meaningful way and asking what is affordable in the aggregate.”
Future debt considerations include hundreds of millions of dollars of debt for the roads while the Narragansett Bay Commission and the Rhode Island Turnpike and Bridge Authority want to issue hundreds of millions for their work.
“The PFMB sets debt limits for state issuances, but no one is looking at the total impact to the taxpayer when you include all levels of government debt,” said Da Ponte. “I’m concerned that Rhode Island taxpayers are overleveraged, but, no one can tell me what constitutes an appropriate or manageable debt level.”
Moody’s Investors Service cited “high relative debt” in assigning Rhode Island its Aa2 general obligation rating in July. Fitch Ratings and Standard & Poor’s rate them AA.