Tom is the editor, publisher, and of theRhode Island Policy Reporter.
If you want thoughtful analysis of what's going on in terms of policy in Rhode Island, you should probably subscribe!
----------------------------------------------
A reply to an editorial.
In a recent Projo op-ed, James Capaldi, the director of our state
Department of Transportation claims that all road construction in
Rhode Island depends on passage of the transportation bonds on
Question 3 this November. But he is being slightly disingenuous.
Road construction will not halt if the $66 million in bonds are not
approved; the construction lobby employs too many people around here,
and too many of them have friends in the administration and in the
legislature. But what will happen if approval is not granted is that
the state may have to come up with a more sensible way to fund road
construction.
DOT has been funding routine construction with bonds for years, which
makes it seem normal. But it's not. Among all the states, we are the
exception, not the rule in the matter of debt. Lots of states borrow
for this or that big road or bridge project, but we borrow $30 million
every year, except for the years in which we borrow much much more
(like this one). Projections have us borrowing the same amount each
year into the foreseeable future.
The question is why? If we're borrowing $30 million every year, then
there's no need to amortize, it's already amortized, at $30 million a
year, and we should just budget for that. Roads are a kind of
investment, but not one with returns--especially not roads built to
replace existing ones, which is what most of the next decade's cost is
for. Constant borrowing like this is a perfectly common financial
strategy, but one that often ends in bankruptcy court.
The history of DOT's debt is a long one, started probably in the
Garrahy administration, when a resort to borrowing was an easy way to
avoid facing the true cost of the department. But successive
Governors have made the problem much worse through malign neglect.
In the past ten years, DOT has dropped over 100 employees, and the
amount of money it spends on construction has gone up very little:
from $95 million in 1994 to $102 million in 2005. Maintenance
activities over that same period have only gone from $26 million to
$39 million. During that same time, federal highway funds, though
they vary a lot from one year to the next, have roughly tracked
inflation, going from $149 million to $207 million. But state dollars
(DOT's budget minus the federal dollars, minus the money they pass
along to RIPTA) going into the department have skyrocketed, going from
$56 million to $104 million. We're getting a lot less for our money
than we used to.
There are lots of little reasons for this--inflation, health care
costs, pension adjustments--but the biggest reason is that DOT's
budget is struggling under around $50 million in debt service, roughly
double the $27 million from 1994. (Part of the debt service is
accounted in the Department of Administration, but it's DOT's debt and
is paid with gas tax money.) That is, at least half of the increase
in state money applied to DOT goes to debt service. It would be much
more, but for the serendipity of the tobacco settlement money, much of
which was spent paying off DOT debt.
Mr. Capaldi will object that the amount of construction has actually
gone way up, since last year we sold $216 million in GARVEE bonds, to
be paid off with future federal highway money. This is the money
going to build the access highway and freight rail to Quonset, the new
Providence River bridge for I-195, and the new Sakonnet River bridge
for Rt. 24. In one sense he would be correct. But construction on
those projects doesn't do much for the bridge rotting away down the
street from me or the intersection that needs signs near you. Nor
does it do anything for the projects Mr. Capaldi lists as "likely" to
be scheduled. The GARVEE bonds planned will require that one-third of
the federal highway money we receive each year goes to their debt
service for the next fourteen years. The DOT situation is like a
family that's bought a house slightly too expensive for them: At best,
they won't be eating a lot of steak in the next few years. At worst,
they won't keep the house. We may finish those four projects, but all
other construction is at risk for the next several years.
Six years ago, 36% of the gas tax collected went into the general
fund, to fund state services like local education aid and protecting
the environment. Today less than 7% goes to the general fund, a drop
of more than $40 million in today's dollars. That sure would have
been useful in last year's budget battles.
Mr. Capaldi knows all of this. In fact he was the one who explained
it to me several years ago. But that was before he was running the
department. It's not his fault that the Governor and the Legislature
won't allocate the money necesary to fund necessary road construction,
but he knows full well that debt isn't the only way to fund DOT, it's
just the worst way.
Vote no on question 3, for saner state spending.
Tom Sgouros,
Wickford, RI
No comments:
Post a Comment