Examining the Bond Issues I : Higher Education
Marc Comtois
Question 4: Higher Education Bonds:
Approval of this question will allow for the State of Rhode Island to issue general obligation bonds, refunding bonds, and temporary notes in an amount not to exceed $65,000,000 for the construction of a new college of pharmacy building at the University of Rhode Island and $7,790,000 for renovations to the former Department of Children, Youth and Families facilities at Rhode Island College.
Project Costs - $72,498,840 in principal w/ $53,916,745 in Interest (6% over 20 years) plus approximately $500,000 in issuance costs. TOTAL: $126,923,278. {Source
PDF}.
The ProJo explained many of the physical justificiation for this expenditure on expansion. As Andrew noted in a previous post, Rhode Island ranks 46th in the nation in higher education spending. Having state of the art research facilities such as those proposed at URI will (hopefully) translate into economic development within the state. Brown University and many other colleges nationwide (MIT, Duke, etc)--in addition to being centers of higher learning--are also viable economic engines unto themselves.
The 128 loop in Boston became a technology Hub largely because of its close proximity to so many research universities with new workers churned out every year. By having such a substantial pool of pharmacists at URI, the state could benefit by being more attractive to pharmaceutical companies and could also obtain research grants from private industry. Such research could be translated into new products coveted by the pharmaceutical industry. Thus, investing in improvements to the URI school of pharmacology can net the state of Rhode Island long term economic benefits.
The argument can be made that pharmaceutical companies should be tapped to pay for the URI facilities. The problem is: they won't. They'll send their attention to another state that will foot the bill.
Economic development is a multi-faceted endeavor. Making higher education more attractive to outside economic interests via a short term investment can translate into many practical benefits--higher employment, better paying jobs, etc.--that will help our perpetually sluggish economy. It's not a quick fix--like a casino--but it will be a very signficant brick in building a more solid foundation for Rhode Island's 21st century economy.
My Conclusion: YES ON 4.
3:45 PM
All valid points, in particular the importance of having a strong university system that serves a a catalyst for economic growth. After all, were it not for the Boston universities ALL of Massachusetts would resemble Fall River and New Bedford.
That said, I'm inclined to vote NO. If the General Assembly didn't p*** away our tax dollars on union giveaways, patronage and welfare there would be plenty of money to fund a world-class university system without additional bond issues.
Though I still work here, my long-term goal now is to retire in a lower tax state. So while my immediate future is in RI, my long term future is not - thanks to the corrupt General Assembly and Democratic Party.
So I just can't see volunteering more of my money for Rhode Island's long term future. Better to put it into an IRA and spend later spend it wherever I end up.
I'm with Tom. I'm actually voting NO on all the spending measures. I just don't see myself being in this POS state long enough to see that 'investment' pay off.
I have 2 questions about bonds in general that I've never really been sure of the answer to...
1. How do I figure out the per-year costs in terms of the state budget?
2. What goes into deciding to use a bond to fund a particular project versus some other funding mechanism?
That's a good question (#2), Andrew, and one to which I'd like to know the answer.
My impression has been that the bond route carries the feel of an additional quid pro quo exchange, whereby the taxpayers approve an expenditure and get exactly what they paid for. What the frequent use of the bond approach allows, according to this impression, is the on-the-sly handing out of tax money that really ought to go to such things, thus enabling the state government to better ply additional funds from the taxpayers. Consider Question 5: bonds for road work?
I could be wrong, but I can't help but feel that the General Assembly uses the general revenue for pet projects and handouts and then returns to the voters for necessities and good investment opportunities. That's why I'm always inclined just to vote "no" across the board.
>>I could be wrong, but I can't help but feel that the General Assembly uses the general revenue for pet projects and handouts and then returns to the voters for necessities and good investment opportunities. That's why I'm always inclined just to vote "no" across the board.
Amen!
I don't think I've voted "for" even one bond issue (that involves spending, err, "investments") in at least ten years.
Greg/Tom, I understand your personal POV, tied as it is to your own economic self-interest--that's fair. But I'm raising a family here and have decided to make it a go. My posting on this blog and involving myself in my local community is evidence of this. I think this is a wise use of tax dollars. But we can disagree.
Andrew/Justin, I also sympathize with your sentiments, but I believe that in some instances bond issues are money well spent. Besides, it's not like RI is the only state that issues municipal bonds for special projects.
Technically speaking, I believe that the bond mechanism is used because the total outlay of money for these "special" projects can't be covered by tax revenue in one fiscal year. A bond is like a credit card--buy now (ie; all the work is done in a few--or even one--year) and pay later (over the next 30 or so). Then the yearly payments are accounted for in each subsequent budget.
There are also other practical benefits to the investors among us (tax exempt interest, bonds are conservative investments, etc.---more here).
Now, sometimes the amount of the bond is so small (like the Fort Adams related Bond), that I agree that the GA could have probably have dealt with it without resorting to a bond issue. But other items are, like I said, too big to a handle in a normal fashion.
I guess what I'm saying is that, while I'd prefer that the General Assembly spend tax revenues more wisely (I hope that's obvious!), I also don't think that we should turn down what we believe to be legitimate uses of tax dollars just because the mechanism used to appropriate that money wasn't what we prefer. Implementation of a good idea through a flawed process is better than no implementation at all.
While I generally support some of the projects in this year's bonds (education, infrastructure, housing) I am voting NO on all of them out of fiscal responsbility. The hundreds of millions that will be spent on these projects will equate to hundreds of dollars per taxpayer over the next 20-30 years. According to ABC 6, question 9 is going to cost about $100/taxpayer/year alone. Until this state can get spending and taxes under control, we should not give it anymore to mess with.
>>Greg/Tom, I understand your personal POV, tied as it is to your own economic self-interest--that's fair. But I'm raising a family here and have decided to make it a go. My posting on this blog and involving myself in my local community is evidence of this. I think this is a wise use of tax dollars. But we can disagree.
Marc,
We agree more than you might assume. In a normal scenario these would be justifiable "investments."
But rightly or wrongly, I believe that passing these bond referenda is the public sector equivalent of "enabling" an addict.
With I think justified cynicism, I've come to conclude that until we get:
Some collapsing bridges (oh wait, the Sakonnet has to be replaced, to the tune of $120 million, because it wasn't maintained), and
Even more-potholed roads (I suppose that's possible), and
A fiscal "crisis" created by a "perfect storm" collision of the unfunded pension liability front with the insatiable welfare industry front ...
That the "average voter" in RI won't wake up and realize the tragedy that 70 years of corrupt Democratic rule has imposed on this State.
So the sooner RI's infrastructure and tax structure collapse, the better.
Only then can this State can go into "political rehab" and start to claw its way into "recovered Demaholic" status.
No on all the bond referenda. How can we criticize the Washington politicians for pork when we carve a pretty good of it out for ourselves in the voting booths?
As Pogo would've said, we have met the special interests, and they are us.
So far, the objections I am hearing is fear of higher taxes and a general loathing of the state. I can not speak to the later.
The pharmacuetical industry will put allot of money into a region with a great pharm/med infrastructure, many times what the state will put in, and it will give tax relief for many years. They will not bother to pay for basics, they will go elsewhere. But take a look at Research Triangle Park in Chapel Hill, NC, and you will see how great something like this could become! It is a no vision, no investment in education type of viewpoint that keeps holding this state back and makes most of the jobs poor paying jobs for a poorly educated provincial workforce.
Being against education of this type is just stupid and short sighted. When all the best jobs keep going elsewhere, and no one with a brain or an income wants to move into RI, this is why.
So far, the objections I am hearing is fear of higher taxes and a general loathing of the state. I can not speak to the later.
The pharmacuetical industry will put allot of money into a region with a great pharm/med infrastructure, many times what the state will put in, and it will give tax relief for many years. They will not bother to pay for basics, they will go elsewhere. But take a look at Research Triangle Park in Chapel Hill, NC, and you will see how great something like this could become! It is a no vision, no investment in education type of viewpoint that keeps holding this state back and makes most of the jobs poor paying jobs for a poorly educated provincial workforce.
Being against education of this type is just stupid and short sighted. When all the best jobs keep going elsewhere, and no one with a brain or an income wants to move into RI, this is why.
I just read a piece by the Providence Journal on Bond 4, and take comfort that few people read and are swayed by their insular little rag anymore. Their arguments against 4 were so provincial and silly I am amazed they take themselves so seriously. Most college students get their news from the internet anyways, and I see the day where reactionary little rags like the projo are marginalized out of existence.
One argument they make is that URI is too far from Providence hospitals to make a new building. Clinical faculty from the URI College of Pharmacy are already working at Providence hospitals as well as the many others around the state, and also at numerous clinics, pharmacies, and other health care facilities around the state. And the commute to Prov. hospitals is never more than 40 minutes away-only in RI would someone consider that a long way! Most commutes in LA and Chicago take that long in the city!!!! Also, URI is close to the many other hospitals in Kent and South County.
ProJo then states that there are Pharmacy schools in Boston anyway-now that is 90 minutes from RI in hell traffic, and those schools are private and cost easily five times what URI does for our students. The MA colleges also do not rate as well nationally and one has a high rate of failure on the boards- Imagine paying 30-45k a year for your kid to go to school over 6 years-for over 200 k - and they can not even pass the license test.
And the college has numerous drug company contracts already. It is silly to think that major pharma is going to promise in press "make this building and we will give oodles of money to RI".ProJo saying they should get this up front shows what a bunch of tight fisted unthinking morons they are.
ProJo has never supported RI higher education, and loves to favor private over public education. But the fact is-one they could care less about- is that the URI COllege of Pharmacy is an affordable way for a RI resident of average means to get into an interesting profession and make upwards of 100k a year. They don't like that-the PROJO likes it the old fashioned way- where they can buy their little Buffy and Todd Weatherspoon their degrees and they can have the silver spoon advantage all their lives. They know little, and care even less, about the average Rhode Islander.
And the ProJo did not even do a little bit of homework on this. They are a farce.
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All valid points, in particular the importance of having a strong university system that serves a a catalyst for economic growth. After all, were it not for the Boston universities ALL of Massachusetts would resemble Fall River and New Bedford.
That said, I'm inclined to vote NO. If the General Assembly didn't p*** away our tax dollars on union giveaways, patronage and welfare there would be plenty of money to fund a world-class university system without additional bond issues.
Though I still work here, my long-term goal now is to retire in a lower tax state. So while my immediate future is in RI, my long term future is not - thanks to the corrupt General Assembly and Democratic Party.
So I just can't see volunteering more of my money for Rhode Island's long term future. Better to put it into an IRA and spend later spend it wherever I end up.
Posted by: Tom W at October 16, 2006 4:30 PMI'm with Tom. I'm actually voting NO on all the spending measures. I just don't see myself being in this POS state long enough to see that 'investment' pay off.
Posted by: Greg at October 16, 2006 4:34 PMI have 2 questions about bonds in general that I've never really been sure of the answer to...
1. How do I figure out the per-year costs in terms of the state budget?
2. What goes into deciding to use a bond to fund a particular project versus some other funding mechanism?
Posted by: Andrew at October 16, 2006 5:10 PMThat's a good question (#2), Andrew, and one to which I'd like to know the answer.
My impression has been that the bond route carries the feel of an additional quid pro quo exchange, whereby the taxpayers approve an expenditure and get exactly what they paid for. What the frequent use of the bond approach allows, according to this impression, is the on-the-sly handing out of tax money that really ought to go to such things, thus enabling the state government to better ply additional funds from the taxpayers. Consider Question 5: bonds for road work?
I could be wrong, but I can't help but feel that the General Assembly uses the general revenue for pet projects and handouts and then returns to the voters for necessities and good investment opportunities. That's why I'm always inclined just to vote "no" across the board.
Posted by: Justin Katz at October 16, 2006 6:16 PM>>I could be wrong, but I can't help but feel that the General Assembly uses the general revenue for pet projects and handouts and then returns to the voters for necessities and good investment opportunities. That's why I'm always inclined just to vote "no" across the board.
Amen!
I don't think I've voted "for" even one bond issue (that involves spending, err, "investments") in at least ten years.
Posted by: Tom W at October 16, 2006 7:32 PMGreg/Tom, I understand your personal POV, tied as it is to your own economic self-interest--that's fair. But I'm raising a family here and have decided to make it a go. My posting on this blog and involving myself in my local community is evidence of this. I think this is a wise use of tax dollars. But we can disagree.
Andrew/Justin, I also sympathize with your sentiments, but I believe that in some instances bond issues are money well spent. Besides, it's not like RI is the only state that issues municipal bonds for special projects.
Technically speaking, I believe that the bond mechanism is used because the total outlay of money for these "special" projects can't be covered by tax revenue in one fiscal year. A bond is like a credit card--buy now (ie; all the work is done in a few--or even one--year) and pay later (over the next 30 or so). Then the yearly payments are accounted for in each subsequent budget.
There are also other practical benefits to the investors among us (tax exempt interest, bonds are conservative investments, etc.---more here).
Now, sometimes the amount of the bond is so small (like the Fort Adams related Bond), that I agree that the GA could have probably have dealt with it without resorting to a bond issue. But other items are, like I said, too big to a handle in a normal fashion.
I guess what I'm saying is that, while I'd prefer that the General Assembly spend tax revenues more wisely (I hope that's obvious!), I also don't think that we should turn down what we believe to be legitimate uses of tax dollars just because the mechanism used to appropriate that money wasn't what we prefer. Implementation of a good idea through a flawed process is better than no implementation at all.
Posted by: Marc Comtois at October 17, 2006 8:26 AMWhile I generally support some of the projects in this year's bonds (education, infrastructure, housing) I am voting NO on all of them out of fiscal responsbility. The hundreds of millions that will be spent on these projects will equate to hundreds of dollars per taxpayer over the next 20-30 years. According to ABC 6, question 9 is going to cost about $100/taxpayer/year alone. Until this state can get spending and taxes under control, we should not give it anymore to mess with.
Posted by: TCC3 at October 17, 2006 8:51 AM>>Greg/Tom, I understand your personal POV, tied as it is to your own economic self-interest--that's fair. But I'm raising a family here and have decided to make it a go. My posting on this blog and involving myself in my local community is evidence of this. I think this is a wise use of tax dollars. But we can disagree.
Marc,
We agree more than you might assume. In a normal scenario these would be justifiable "investments."
But rightly or wrongly, I believe that passing these bond referenda is the public sector equivalent of "enabling" an addict.
With I think justified cynicism, I've come to conclude that until we get:
Some collapsing bridges (oh wait, the Sakonnet has to be replaced, to the tune of $120 million, because it wasn't maintained), and
Even more-potholed roads (I suppose that's possible), and
A fiscal "crisis" created by a "perfect storm" collision of the unfunded pension liability front with the insatiable welfare industry front ...
That the "average voter" in RI won't wake up and realize the tragedy that 70 years of corrupt Democratic rule has imposed on this State.
So the sooner RI's infrastructure and tax structure collapse, the better.
Only then can this State can go into "political rehab" and start to claw its way into "recovered Demaholic" status.
Posted by: Tom W at October 17, 2006 12:13 PMNo on all the bond referenda. How can we criticize the Washington politicians for pork when we carve a pretty good of it out for ourselves in the voting booths?
Posted by: Rhody at October 17, 2006 2:40 PMAs Pogo would've said, we have met the special interests, and they are us.
So far, the objections I am hearing is fear of higher taxes and a general loathing of the state. I can not speak to the later.
Posted by: rt at October 29, 2006 11:03 AMThe pharmacuetical industry will put allot of money into a region with a great pharm/med infrastructure, many times what the state will put in, and it will give tax relief for many years. They will not bother to pay for basics, they will go elsewhere. But take a look at Research Triangle Park in Chapel Hill, NC, and you will see how great something like this could become! It is a no vision, no investment in education type of viewpoint that keeps holding this state back and makes most of the jobs poor paying jobs for a poorly educated provincial workforce.
Being against education of this type is just stupid and short sighted. When all the best jobs keep going elsewhere, and no one with a brain or an income wants to move into RI, this is why.
So far, the objections I am hearing is fear of higher taxes and a general loathing of the state. I can not speak to the later.
Posted by: rt at October 29, 2006 11:03 AMThe pharmacuetical industry will put allot of money into a region with a great pharm/med infrastructure, many times what the state will put in, and it will give tax relief for many years. They will not bother to pay for basics, they will go elsewhere. But take a look at Research Triangle Park in Chapel Hill, NC, and you will see how great something like this could become! It is a no vision, no investment in education type of viewpoint that keeps holding this state back and makes most of the jobs poor paying jobs for a poorly educated provincial workforce.
Being against education of this type is just stupid and short sighted. When all the best jobs keep going elsewhere, and no one with a brain or an income wants to move into RI, this is why.
I just read a piece by the Providence Journal on Bond 4, and take comfort that few people read and are swayed by their insular little rag anymore. Their arguments against 4 were so provincial and silly I am amazed they take themselves so seriously. Most college students get their news from the internet anyways, and I see the day where reactionary little rags like the projo are marginalized out of existence.
Posted by: rt at November 1, 2006 9:18 PMOne argument they make is that URI is too far from Providence hospitals to make a new building. Clinical faculty from the URI College of Pharmacy are already working at Providence hospitals as well as the many others around the state, and also at numerous clinics, pharmacies, and other health care facilities around the state. And the commute to Prov. hospitals is never more than 40 minutes away-only in RI would someone consider that a long way! Most commutes in LA and Chicago take that long in the city!!!! Also, URI is close to the many other hospitals in Kent and South County.
ProJo then states that there are Pharmacy schools in Boston anyway-now that is 90 minutes from RI in hell traffic, and those schools are private and cost easily five times what URI does for our students. The MA colleges also do not rate as well nationally and one has a high rate of failure on the boards- Imagine paying 30-45k a year for your kid to go to school over 6 years-for over 200 k - and they can not even pass the license test.
And the college has numerous drug company contracts already. It is silly to think that major pharma is going to promise in press "make this building and we will give oodles of money to RI".ProJo saying they should get this up front shows what a bunch of tight fisted unthinking morons they are.
ProJo has never supported RI higher education, and loves to favor private over public education. But the fact is-one they could care less about- is that the URI COllege of Pharmacy is an affordable way for a RI resident of average means to get into an interesting profession and make upwards of 100k a year. They don't like that-the PROJO likes it the old fashioned way- where they can buy their little Buffy and Todd Weatherspoon their degrees and they can have the silver spoon advantage all their lives. They know little, and care even less, about the average Rhode Islander.
And the ProJo did not even do a little bit of homework on this. They are a farce.