Lincoln Chafee, in his final speech and budget presentation as Rhode Island governor, proposed a November bond referendum on $275 million of new general obligation money and a $12.5 million moral obligation payment for 38 Studios debt.

Under Chafee's initiative, which he presented to lawmakers in Providence along with his $8.5 billion spending plan for fiscal 2015 on Wednesday night, voters would consider borrowing $125 million to replace an engineering school at the University of Rhode Island; $75 million for environmental measures such as brownfield remediation and open-space acquisition; $40 million for renovations to mass transit hubs throughout the state; and $35 million toward arts programs.

Chafee, who took office in 2011, will not seek re-election. He was elected as an independent but has since registered as a Democrat.

Chafee said his budget, up 4% while closing a projected $149 million deficit, would hold the line on taxes and improve Rhode Island's competitive position and infrastructure. He has proposed $80 million over five years for a bridge maintenance program, $38 million for the public school kindergarten through 12th grade funding formula, and $10 million to the state's three public colleges -- URI, Rhode Island College and the Community College of Rhode Island -- to offset a second straight year of tuition-hike freezes.

"These are important investments, but getting the economy going requires more than repairing our bricks and mortar," said Chafee.

His proposed $275 million bond referendum "is certainly the area that receives the greatest scrutiny," said Senate President M. Teresa Paiva Weed, D-Newport.

"They're all good needs and they're all competing needs, but again, looking at what we can afford and what are the outlying budget deficits caused by the borrowing is something that both our committees will look at," said House Speaker Gordon Fox, D-Providence.

House and Senate finance committees will get first crack at Chafee's budget proposal.

The budget process could renew controversy over bonds issued for the failed 38 Studios video game maker.

The Rhode Island Economic Development Corp. -- since renamed Rhode Island Commerce Corp. -- sold federally taxable municipal bonds backed with the state's moral obligation to induce former Boston Red Sox pitcher Curt Schilling to move the company from Maynard, Mass., to Providence in 2010.

The company declared Chapter 7 bankruptcy in 2012, with taxpayers on the hook to repay the bonds.

After extensive debate, lawmakers in June approved a $2.5 million payment to cover bond payments in 2013 and avoid a credit-rating downgrade. Moody's Investors Service had threatened to cut the state's Aa2 rating if Rhode Island failed to follow through with its obligation.

This year Chafee is asking for $12.5 million, matching the debt service schedule on the bonds.

Under a plan Chafee introduced last year, Rhode Island would pay roughly $12.5 million annually through 2020. Those payments, plus $15.4 million available through capitalized interest and the capital reserve fund, would total $104.6 million, budget officials estimate.

Discussions to settle a state lawsuit against the company are under way. In addition, state lawmakers have filed legislation that would enhance such a settlement.

Fitch Ratings and Standard & Poor's rate the state's GO bonds AA.

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