It’s the tail end of February, so few would consider the next few weeks to be an election season. Not in Rhode Island. On March 2nd, voters in the Ocean State will have the opportunity to cast a vote on seven statewide ballot measures. These seven ballot measures would permit the state government to issue up to $406.3 million worth of bonds for a myriad of projects across Rhode Island.
The seven ballot measures, titled Question 1 through Question 7, would authorize the state government to issue bonds to fund numerous state spending projects. Specifically, $107 million would be allocated for the University of Rhode Island (Question 1), $74 million for recreational facilities (Question 2), $65 million for housing restoration (Question 3), $71.7 million for transportation infrastructure (Question 4), $15 million for the Early Childhood Care and Education Capital Fund (Question 5), $7 million for Cultural Arts and State Preservation Grants Programs (Question 6) and $60 million for industrial facilities infrastructure (Question7).
These bonds, accounting for payments to interest and principal, will cost state taxpayers about $647 million, according to data provided by Ballotpedia.
Bonds can be an effective funding mechanism for expensive capital projects, as the cost is spread out over a long period of time. However, bonds can be problematic for taxpayers as the accrued interest on the principal amount makes the total cost far more expensive than the issuance cost. So while there may be an economic benefit today from construction or repairs to infrastructure, it will ultimately leave future taxpayers to cover the cost of the interest and principal.
According to data gathered by Ballotpedia, Rhode Island voters have approved 63 of 76 ballot measures since 1995 which is 82.89 percent of the bond measures proposed, defeating only 17.11 percent (or 13 of them). Since 2008, Rhode Island has cast their ballots for a total of 22 bond measures that equal $1.3 billion in principal value. They have not rejected a ballot measure since 2006. Worse yet, Rhode Island taxpayers already suffer from the third-highest bonded-debt per capita rate in the country at $10.2 million per person, according to the American Legislative Exchange Council. Only Connecticut and Alaska rank worse.
Even though many Rhode Island voters may be in favor of casting their ballot for these measures, it is important to recall that the buildup of principal amount can end up costing more than what the issuance cost was, putting the burden on the taxpayer. With that in mind, voters interested in responsible state governance and sound fiscal policy should be wary of these latest measures and question if more bonded debt is truly needed.