Let’s Make Sense Out of Refinancing


Governor Gina Raimondo’s proposed RhodeWorks project to repair Rhode Island bridges and roads with debt financed through tolls on truckers is a 10-year project:

Our plan will get us to 90% structurally sufficient bridges by 2025, make Rhode Island more attractive for businesses, and create about 11,000 job-years over the next decade

The latest variation is the one that passed the state Senate, which the House may (or may not) take up in an autumn session.  The Senate’s version presents a smaller scale, down to a $500 million bond, from $700 million, but it also includes “an additional $120 million… through the refinancing and restructuring of prior federal debt.”  Folks should take a closer look at that part.

Reviewing supporting documentation, it appears that the extra money is actually the first four years of lower debt service from refinancing GARVEE bonds for an extra four years.  As things currently stand, the state still owes $289 million on the bonds and will be done paying them after 2021.  The refinancing will extend the payments to 2025 and add another $15 million in interest.  (Refinancing costs aren’t mentioned, so let’s assume it’s part of the $15 million.)

Think about that.  Over the ten years of the RhodeWorks project, this refinancing will actually cost $15 million.  It will direct $15 million away from infrastructure or some other area of state spending.  If the state simply pays off the bonds, it’ll spend around $50 million a year through 2021 and then that money will be freed up for the final three years of RhodeWorks.

By contrast, if the state refinances, it will free up $20 million early on but add $30 million in the later years, with an overall increase of $15 million when all is said and done.

Now let your imagination run wild and consider the possibility of the state’s paying for bridge and road repairs with savings rather than debt.  $500 million is $50 million per year for 10 years.  Over the course of the RhodeWorks program, the last three years would be paid for simply by paying the GARVEE debt on time.

It boggles the mind to wonder how many decisions like this are piled up on the regular expenditures of the state’s nearly $9 billion annual budget.

  • Mike678

    It’s amazing how all the bonds passed last year–and much of the legislation passed this year–all claimed to create jobs! If politicians were Pinnochio, we could heat RI this winter with the wood cut from their elongated noses…

  • Phil Hirons Jr

    But if they don’t front load the work Gina won’t be able to point to as many fixed bridges as she runs for {insert higher office}.

  • D. S. Crockett

    Make no mistake about it, tolls for truckers begins the processes of RI citizens paying per mile to travel on RI roads. It’s coming citizens in our lifetime. Thank you for your very thoughtful voting record over the years. You have been suckered by the so-called party of the little guy. What frauds, including the citizens.

    • Tommy Cranston

      especially the citizens.

  • ShannonEntropy

    It used to puzzle me why Rhodent voters pass every bond issue

    But I finally figured it out … most voters are your older citizens.
    So they think “Let’s borrow the bucks and spend them today
    … and then let our grand·kids pay them off 30 yrs from now when we are long gone. And if we can re·amortize those debts to kick them even further down the road, so much the better”

    Totally selfish … but most people are, in my experience

  • Harry 200

    Why do does the state have to borrow all the money at once? it seems like a total waste of interest payments. Why is the bonding going through the RI Bridge Authority? I thought they were only for the toll bridges. Is it because voters don’t get to vote on these bonds this way. Speaking of the Bridge Authority, has anyone noticed that it is taking forever to finish painting the Pell Bridge and that what has been painted is already rusting. Just by looking at it you can see that it was a sloppy job. Also there is rust on the side walks.

  • bobwashburn

    Where in America is there a state that finances public works with savings? $15M interest on $500M over ten years is only $1.5 million per year. To me that is small dollars to rebuild bridges and roads.

    • Justin Katz

      You’re misunderstanding. The $15 million is only on the GARVEE refinance add-on. Interest on the $500 million will be $563 million… plus $10 million in financing costs plus $43 million to build the infrastructure to collect tolls.
      Alternately, the state could find about a half a percent of its budget in savings and pay as we go.

      • Tommy Cranston

        It’s funny how state’s like Florida and Texas have exponentially better roads with ZERO income and property taxes less than a third of RI. Oh and NO tolls on 95 in Florida.
        Here’s my idea for “funding infrastructure”:
        A 6% income tax
        7% sales tax-8% on food
        One of the higher gas taxes in America.
        Some of the highest registry fees in America.
        5th highest property taxes.

        That’s IT baby-not another f****** dime.