Reading Steven Frias’s commentary in today’s Providence Journal points toward a possibility that should really be emphasized as the General Assembly embarks on a session during which some are saying truck tolls are a done deal. Frias notes decades of resistance to tolls, in Rhode Island, and emphasizes that:
In the past, new taxes have been expanded after efforts to avoid the tax led to revenue shortfalls. For example, in 1969, Gov. Frank Licht’s investment tax was adopted. It was an income tax limited to only interest paid on savings accounts, dividends, and capital gains, which significantly impacted a small minority of taxpayers. But after millions were withdrawn from savings accounts in Rhode Island banks and reinvested into tax-exempt bonds to avoid the tax, the investment tax ended up generating far less in revenue than originally estimated. As a result, in 1971, a state income tax was imposed on all.
In particular Democrat Governor Gina Raimondo’s toll-and-borrow scheme is practically designed to ensure that tolls expand to cars if the actual collections fall short of the estimates (and they will).
Some have wondered why the governor is so insistent on rushing forward with a revenue bond when a general obligation bond would be sure to pass at the ballot box and would save the state tens or hundreds of millions of dollars in interest. I’d argue that this financing mechanism would be contrary to the state constitution if we had a real judiciary, but even if that isn’t the case, why waste taxpayer dollars? One obvious explanation is that unnecessarily high interest on the debt makes RhodeWorks a twofer for Raimondo’s friends and backers, funding work for the Laborer’s union and a windfall for Wall Street investment types.
Another explanation could be that people in state government have their eyes on much more revenue — revenue that’s relatively easy to ratchet up and that doesn’t count in some measurements of the state’s tax burden — by taxing cars. From this cynical perspective, we can observe that placing a debt of the state on the rickety planks of such a narrow bridge makes it likely that the revenue source will prove inadequate, practically obligating the state to expand the base, specifically to catch the driving piggy banks that can’t simply route around the state: those of us who live here.
Such a cynic might also expect that the governor has the calendar worked out with the expectation that she’ll have moved up to bigger and better things by the time this becomes clear. (She certainly has the investment experience to know how to structure the bonds to ensure the delay.) But even without that level of cynicism, it’s reasonable to conclude that one truly “done deal” should be the end of the political career of any legislator or executive who brings any tolls to the state as part of this particular project.