A Future with Tolls, in Rhode Island


Well, it appears that Speaker of the House Nicholas Mattiello (D, Cranston) was impressed with the analysis finding that borrowing around $500 million, at the cost of around $600 million in financing and other fees and grabbing $400 million in federal funding might add $500 million to the local economy.  Thirty-three cents on the dollar?*  What a bargain!

Unless a wave of new candidates begins proclaiming an intention to run against the Rhode Island establishment soon, it looks like we’ll be getting tolls, and a narrow range of unionized labor and government operatives will be made very wealthy, cycling gobs of money back to the politicians as campaign contributions and in-kind donations.

Apart from those targeted boons, what does the future hold for Rhode Island?  For one thing, it’s a reasonably safe bet that such a massive influx of money will mean the newly funded projects will prove too much for an incompetent (and now union-run) Department of Transportation to handle, producing a great deal of waste.  And the money will prove too much for the state government to avoid an escalation of its usual corruption.  That means the money won’t go as far as it’s projected to go toward improving infrastructure.

Meanwhile, the state’s analysis suggests that 25% of all truck traffic will find alternative routes to avoid Rhode Island, but that will prove very low.  Additionally, some not-insignificant percentage of local truckers (who are supposed to provide about half of the revenue, according to Mattiello’s commentary) will simply hop the border or relocate farther away.  That means the revenue will come in short, and we’ll have to make it up somehow.

The state will do so either with increases in broad-based taxes (if the politicians are trying to disguise what’s happening) or by expanding tolls to include passenger cars.  Considering that we’ll have to find new tax money to subsidize all of the low-income immigrants that our sanctuary-state status will continue to attract and to fund all of the new welfare programs that we’re going to be handing out through our “first in the nation” Unified Health Infrastructure Project (UHIP), I’d wager on expanded tolls on top of increased taxes and fees.

Oh, and don’t forget that the massive pension avalanche is going to become an undeniable problem in a few years, with investment returns continuing to come in well below what the governor estimated when she was treasurer, and we’re going to be hooking whole new industries, in the state, on government subsidies funded through a one-time debt refinance, not to mention our new adventures in subsidized housing and manipulative zoning that will attract more people wanting subsidies while driving ladder-climbing families out of the state to find the sorts of communities in which they actually want to live.

Then we’ll spend 10 years arguing over whether or not this is what’s happening.  Our economy will not have recovered.  We’ll still have abysmal infrastructure.  We’ll have an expensive tolling system.  We’ll have a massive debt bill (that voters never approved) still to pay off.  And the balance of the electorate will be so far to the big-government end that there will be absolutely no way to turn things around.

The Chafee-Fox years were deeply embarrassing for Rhode Island in a number of ways, but the era of Raimondo and Mattiello is shaping up to spell the end of the state.

* Note that I haven’t gone through the REMI analysis, yet.  This is a riff based on what I’ve read in the news.

  • Mario

    I agree that the toll revenue will almost certainly come in below “expectations,”* but, last I looked, the bond bill set aside millions to cover the shortfall, so whether funds will have to be found elsewhere depends on the severity of the failure, not its existence alone.

    (*What is the correct term for an assumption few believe?)

    [To head off any potential unwarranted assumptions, I’m pretty sure the backup fund exists neither as a nefarious plot to hide the true cost nor a brilliant fiscally prudent plan, but simply because no one in their right mind would buy a revenue bond whose only (official) source of funding was an untested, hypothetical revenue stream, i.e. it was probably a financing demand.]

    I would like to know what the plan is for the backup account in 30 years if the revenue materializes, though. We know it won’t be there, but if they are on the record with an official plan for it, stealing it will be a little harder and using it to cover a shortfall will not be as easily ignored. Small hopes (ooh, is that a potential new state slogan?).

    • OceanStateCurrent

      The reserve fund is one year’s finance payment, and it’s not just floating money.

      Working myself and then with the help of a finance professional, the only way I can make Raimondo’s projections work is if she intends to use the reserve fund the make the final payment. If that’s correct, then there really is no reserve fund. We’ll just be borrowing the final payment 30 years ahead of time.

      The bonds will sell because they’ll be as sure a thing as any general obligation bond, but with a higher interest rate to compensate for the imaginary risk.

      The whole scam stinks and ought to be illegal.

      • Mario

        Oh, that is awful. I noted its existence, but never checked the numbers. Ugh.

        I wouldn’t discount the chances that a bond sale could fail, though. There are more than enough warning signs about Rhode Island’s fiscal condition, if anyone bothers to check, and that is just the evidence from the official records. Just as the state has some of the toughest anti-corruption laws, RI has the expertise of a second-world country on maintaining the separation between how things work on paper and how they work in practice.

        Still, though, a fake reserve fund? And here I was being careful with my criticism. Ugh.

        • ShannonEntropy

          Speaking of UGH … you know what is UGLY with a capital UGH ??

          The fact that only someone who “knows a guy” can buy any of these guaranteed-high-interest State-backed Bonds

          Trvst me … these deals are for Insiders ONLY

  • Northern Exposure