Notebook Entry: “Secretary of Commerce vs. RICWFA paradox”
A brief exposition of an entry put down in an actual dead-tree notebook, referring to a news-subject worth watching, at a time where there is certainly no shortage of subjects vying for public attention…
Secretary of Commerce vs. RICWFA paradox — A group of Rhode Island leaders led by General Treasurer Gina Raimondo announced a plan in late March to help Rhode Island municipalities secure low-interest loans for infrastructure projects through the quasi-public Rhode Island Clean Water Finance Agency. At about the same time, the Rhode Island Public Expenditures Council pitched to the House Finance Committee its plan to move a chunk of the the quasi-public Economic Development Corporation’s function to a Secretary of Commerce position situated inside of the Governor’s office. This seems, at least on the surface, to have things a bit backwards, with a quasi-public organization assuming a significant role in providing a public good, i.e. maintenance of roads and bridges, while the government-proper devotes more energies to “economic development”, most of which ultimately must happen outside of government.
According to WPRI.com’s Ted Nesi, “the treasurer’s office estimated communities could save $1 million on every $10 million in loans thanks to the lower rates they’d get by borrowing through the AAA-rated [RICWFA]”, but the ability of a city or town to pay off debt doesn’t change because it takes a new route to get a loan, and adding a new middleman isn’t a guaranteed method for lowering the cost of something. It is fair to ask if there’s a more fundamental issue with RI cities and towns paying more than they need to for lending, if someone else will be assuming risk of default in RICWFA routed loans, or if there’s some other cost to this plan that’s not immediately obvious.
(Bumped upwards, from an original April 4 posting date)