State Agrees They Can’t Borrow Forever
Every two years, I’ve had this thought that the referenda on the ballot needs an “other side.” At least someone to explain what it means to the voters from the other point of view. Every time there’s a question about roads or bridges or buildings at URI or open space, every one of those questions has some group out there advocating for it. They have their own yard signs with a “YES on #2” or whatever. And it seems that every referendum passes overwhelmingly. Of course, why wouldn’t we want new roads or a shiny new classroom at URI or public space? Of course we want all that, it’s all free right? Plus, we’re told that the federal government is going to at least match the money, so we’re getting all these things for half price.
Most voters have no idea that when they vote for these referenda, they’re voting themselves a tax increase. Each year the taxes go up and we hear people screaming about “those crooks” on Smith Hill and in Washington, yet they have no idea they partially did it to themselves by voting in favor of these spending measures.
Today in the Providence Journal is an article that Rhode Island will no longer borrow to spend on infrastructure.
For the first time in memory, the state this year will not ask voters’ permission to borrow tens of millions of dollars for the state’s transportation system — and run up borrowing costs.
The change will save millions in interest
So how about that “savings” when we get matching money from the federal government? Here’s one example in the article:
In 2010, the voters approved the borrowing of $84.7 million — but with interest added, the cost was $147.7 million.
That amounts to paying an extra 57% in interest. There goes the “savings,” not to mention that even federal money still comes from our pockets anyway. It’s not like federal money is free money either.
How much is this borrowing cost us?
The debt-service cost to the DOT has risen to $50 million a year. Michael P. Lewis, the state director of transportation, said that if the borrowing had continued, the annual debt-service expense would have risen to $70 million in a decade.
That’s $50M a year that we’re paying because we basically put it all on a credit card instead of paying cash. If we don’t have the money to pay for the infrastructure, why are we building it? If you need these things built, then pay for them now. That’s really what taxation should be for, the infrastructure that everyone uses. Another example of this issue is actually under way right now. Shortly after Dan McGowan reported that Providence will still finish the year with a $19M shortfall, the city has decided to borrow another $40M to repair the roads. That’s like getting a new iPhone when you don’t have enough money to cover the mortgage.
Lastly, not to toot our own horn…well, ok yeah, this is tooting our own horn, here at Anchor Rising we’ve been saying the same thing for years. At least, Justin and Marc are on this record as being against borrowing for roads and bridges. (Friends who would listen to my rants can attest that I was also on board with this philosophy as well.) Justin even posted in his pre-Anchor Rising format as far back as 2004 and Marc did as well, in this more familiar look and feel. So this begs the question, will Rhode Island wait another eight years or more to finally realize that we are right about issues like debt, pensions and insider deals?