October 17, 2006

Examining the Bond Issues II: Transportation

Marc Comtois

Ah yes....what would an election ballot be without the prerequisite Transportation Bond.

Question 5: Transportation 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 $80,000,000 to match federal funds, provide direct funding for improvements to the state’s highways, roads and bridges; $7,000,000 to provide funding for commuter rail, and $1,500,000 to purchase and/or rehabilitate buses for the Rhode Island Public Transit Authority’s bus fleet.

Project Costs - $88,145,000 in principal w/ $65,553,399 in Interest (6% over 20 years) plus approximately $600,000 in issuance costs. TOTAL: $154,316,666. {Source PDF}.

As the ProJo editorial in support of this measure stated, the state will receive $394 million in federal matching funds if the bond issue is approved. (Remember all of that "pork" talk?) After detailing how the money would be spent (195 relocation, pothole filling, etc.) the ProJo editorial also concluded that "Rhode Islanders should have little hesitation about the wisdom of approving this bond sale. To reject it would be a false economy."

It certainly rankles to spend so much on roads, year after year. The bottom line is that transportation bonds seem to always pass. Sometimes I vote for them, sometimes I don't. Does the state need to maintain its transportation infrastructure? Of course. But what would happen if we didn't approve these bonds? I don't know. Has it ever happened? I await the wisdom of the commenters!

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The question I have always had about these transportation bonds is the extent to which they are covering maintenance expenses that should be included in the operating, not the capital budget. Of course, including them where they belong would require either higher taxes or cuts in other programs. But since it is easier to issue transportation bonds than social welfare spending program bonds, this is what we get, year after year.

To be sure, some of the bonds are no doubt covering legitimate capital expenditures. But even then, the question arises: would we need as many new capital expenditures (say, for bridge replacements) if we had spent adequately on maintenance? Most people who confront these problems in the private sector would say the answer is obvious.

So once again, what we have here is a clever combination of legitimate need and political flim flam.

Posted by: John at October 17, 2006 11:06 AM

I have been told that Rhode Island is the only state in the United States that does have its share of gasoline taxes earmarked for transportation needs. Instead, the state taxes on gasoline go into the general fund.

Posted by: Barry at October 17, 2006 3:33 PM

"Does" in the previous post should be "does not" have its taxes earmarked for transportation needs.

Posted by: Barry at October 17, 2006 3:36 PM