October 24, 2008
Let's Learn the Lesson Now
So in the spring, the General Assembly and the governor passed a smoke-and-mirrors budget, and we're well on our way to the nine-digit midyear shortfall that was obvious from the moment the state's finances were declared "balanced." What's the next grand illusion? A third of a billion dollars in tax anticipation notes to kick the problem a few more months down the road:
Government leaders are turning to the citizens of Rhode Island to help avert a financial disaster, according to an unprecedented plan released last night that allows the state to borrow $350 million in the coming days by selling short-term bonds to residents, small businesses and financial institutions. ...The deal will operate largely like an eight-month certificate of deposit, or CD. For a minimum investment of $1,000, the state will offer an interest rate "in the 3 percent range" (the actual rate will be set by the market Monday).
The interest earned is tax free for Rhode Island and federal tax filers; the notes will be repaid June 30, 2009.
My fellow Rhode Islanders, a 3% (ish) return on an investment is not worth the protraction of the state's problems. The state government is desperate because the state government has been relying on miracles. We should give it instead a slap of reality.
Borrowing to cover basic operating expenses. As with the highway bond referendum. Not a good idea.
Posted by: Monique at October 24, 2008 1:30 PMLet's see...invest money in a taxable FDIC-insured CD at 3.5%
-or-
Invest in a state that can't manage its budget.
I'll pay the taxes because I will end up having to pay someway, somehow anyways.
The state is desperate. Mismanaged and desperate. We are screwed.
Next thing you will hear is the reason the state has the highest unemployement and worst climate for business growth is because of the credit mess.
Another pass the buck opportunity for GA.
Posted by: Rabbit at October 24, 2008 2:10 PMIf you can believe it, Rabbit, that reason has already been floated here under another comment thread.
The real lesson is that our policies have been so ill-advised that even in the "boom" years, before the fiscal mess, Rhode Island's economy was not great.
Posted by: Monique at October 24, 2008 9:14 PM