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.