Not-So-Quasi-Publics and Unconstitutional Debt

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In my previous post, I suggested that revenue and moral obligation bonds should be found illegal under the state constitution.  Here’s the relevant section, from Article VI, “Of the Legislative Power”:

Section 16. Borrowing power of general assembly. — The general assembly shall have no powers, without the express consent of the people, to incur state debts to an amount exceeding fifty thousand dollars, except in time of war, or in case of insurrection or invasion; nor shall it in any case, without such consent, pledge the faith of the state for the payment of the obligations of others. This section shall not be construed to refer to any money that may be deposited with the state by the government of the United States.

I may be missing some legal subtlety, here, but this is why the state goes through “quasi-public” agencies like the Commerce Corporation (formerly the Economic Development Corp., or EDC) and the Rhode Island Turnpike and Bridge Authority for non-general-obligation debt, but it’s a scam.  In the language of Article VI, Section 16, these agencies are “others” that can incur their own debt based on their own revenue, but without the General Assembly being able to “pledge the faith of the state for the payment” of their obligations.

Obviously, that doesn’t mean that the state can’t pay their obligations.  It just means that — wink, wink, nod, nod — ensuring the payment from taxpayers might require some political pressure.  In today’s era of government/union/investor cooperation, that pressure is baked into the entire electoral system on an ongoing basis.

In the case of Governor Raimondo’s hundreds of millions of dollars in debt (over a billion dollars, with interest) for the RhodeWorks project, it would go through the Turnpike and Bridge Authority.  To make the loophole work, the legislation enabling the project gives the authority permission to enter into revenue-bond debt and ” to enter into contracts with the state or any department of the state to operate and/or manage toll facilities on state roads or bridges not owned, leased by or under the control of the authority, and to collect tolls from such facilities on behalf of the department of transportation, provided such tolls shall be set by the state acting through the department of transportation pursuant.”

In short, the role of the authority is solely to enter into debt and collect the revenue to pay it off.  That’s it.  The bridges under its control aren’t even marked on the map being used to justify RhodeWorks.

The gauze of legitimacy that covers this fraud is getting pretty thin, though.  Consider the recently created Executive Office of Commerce, headed by Secretary of Commerce Stefan Pryor.  According to the governor’s last budget proposal, the office now has a nearly $80 million budget, largely funded with state taxpayer money.  In other words, it’s fully an agency of state government.

So, where’s its Web site?  Go ahead and look on a few search engines.  When I called the Commerce Corp. for help, they gave me the phone number of the Executive Office, where Chief Implementation Aide Suzy Melo told me — after saying I should find it under the umbrella ri.gov site — that the official Web site doesn’t appear to be up, yet.  Granted, it’s a young agency, but with the administration already rolling out big-dollar programs, a quick Web site following the state’s standard format shouldn’t have been difficult.

Although she declined to give me Secretary Pryor’s official email address, Melo suggested I email any questions through her, to an email address with a commerce.ri.gov extension that has no related Web site.  (An email I sent to “spryor@commerceri.com,” following the standard format for the quasi-public has received no response as of this writing.  However, it did not bounce back, while an email sent to a dummy commerceri.com address bounced back immediately.)

At the bottom of a press release about Pryor’s appointing the leadership for the “quasi-public” Commerce Corp., however, I did find a Web site that appears to be serving the purpose for the time being, at least to the extent that it actually lists Secretary Pryor’s name under “management,” whereas Pryor is not listed at all on the Commerce Corp.’s directory or board.

The logo in the upper left-hand corner of the edc.ri.gov site is the same as the Commerce Corp’s logo, and that all of its listed staff have Commerce Corp. “.com” email addresses.  From the other angle, I’ve complained before that the “.com” site has published explicitly pro-Raimondo press releases that would more appropriately come out of her communications office.

The point is that the line between the “quasi-public” and the fully public is almost entirely theoretical.  Indeed, the governor’s major economic development plan — which she announced yesterday alongside the Speaker of the House and Senate President and which she financed with general obligation debt, avoiding voters by working it as a refinance — is largely being processed through the Commerce Corp.

The structure of this arrangement is actually quite a bit like the rationale for hiring former Democrat state Representative Donald Lally despite ethics laws that would appear to forbid it.  With Lally, the governor created a “policy position” in her office, which is essentially an empty chair with Lally’s name on it while he works for a state agency.  With non-general-obligation debt, the state creates quasi-public agencies that are for all intents, purposes, and uses fully state agencies, but that are labeled as “other” so government officials can authorize debt that taxpayers aren’t technically obligated to pay, although government officials have every intent of making sure they get paid one way or another.



  • Phil Hirons Jr

    RI’s (and I assume almost every state’s) quasi public bodies combine the worst aspects of government and the private sector. I’ve be saying this since I got into politics in 1996.

  • Winter Solstice

    Incredible that the Commerce Corp. doesn’t have a website and Sec Pryor has no email. Last spring the GA allocated 23 million for this “revision” of the EDC and, a few months after his appointment, Mr. Pryor testified before the House Finance that Commerce Corp. needed 60 million additional dollars to function (which it was given). Why don’t the citizens of the state have access to this major quasi-public agency? It seems that the Raimondo administration has repeatedly attempted (and succeeded to some degree) to lessen our access to state government.

    • OceanStateCurrent

      Just to be clear, what doesn’t have a Web site is the Executive Office of Commerce, which is fully a state agency. There’s a lot of ambiguity between that and the “quasi-public” Commerce Corp (Commerce RI).

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