PROVIDENCE — Calling it a “home run” piece of legislation, Rhode Island Speaker of the House Gordon Fox and other dignitaries announced at a State House briefing Thursday morning, March 21, a proposal which would make it easier for cities and towns to maintain their bridges and roads while also spurring job creation.
The “Municipal Road and Bridge Revolving Fund” would be administered by the Rhode Island Clean Water Finance Authority (RICWFA). Funding the initiative would require a long-term investment commitment from the state and would enable municipalities to borrow a steady, discounted stream of funds in perpetuity.
“It’s a little known agency that has for a long time provided significant resources to cities and towns,” Speaker Fox said of the RICWFA. The speaker, General Treasurer Gina M. Raimondo, Senate President Teresa Paiva Weed and Dan Beardsley, executive director of the Rhode Island League of Cities and Towns, presented the proposal.
“It’s an already proven method of providing services. And it’s an agency city and town administrators are familiar with,” the speaker added.
Said Treasurer Raimondo, “As leaders, our top priority is getting our economy moving again by taking action and creating opportunities for growth and job creation. Establishing a predictable, innovative alternative for cities and towns to finance their road and bridge improvements is an important cornerstone to building a vibrant economy for our state.”
The legislation, which will be formally submitted in the coming weeks, includes five key components:
- Builds on the success of the Rhode Island Clean Water Finance Authority, an expansion modeled after other states
- Improves municipal access to capital at lower-rates for long-range planning and infrastructure investment
- Provides local budget relief by lowering annual debt service payments
- Creates economic opportunities for the construction trades and their suppliers
- Builds on the momentum of pension reform
“By establishing a sustainable funding stream, municipalities will be able to make long-term plans separate from the uncertainty of the annual budget appropriations process,” Speaker Fox continued.
“It will also help the construction trades plan for steady work, keeping projects more cost-effective,” he added. “These two things are directly connected to one another. Infrastructure is critically important to any recipe for economic success.”
Treasurer Raimondo referenced a recent study conducted by a national engineering organization that deemed Rhode Island’s roadways “fair” and many of its bridges “obsolete.” Another study claimed drivers in the state incurred some $350 million annually in vehicle repair costs and wear, which averaged to $468 per motorist.
“I don’t know of any Rhode Islander who couldn’t use an extra $500 in their pocket,” she added.
In addition, the treasurer said as much as 40 percent of Rhode Island’s construction workforce remains unemployed or underemployed, making the job-creation portion of the legislation that much more significant.
The legislation, Treasurer Raimondo continued, “creates a vital cornerstone to creating a vibrant economy in Rhode Island. She added, it is “as much a jobs proposal as it is one for infrastructure.”
The treasurer credited work done on pension reform for putting the state in position to initiate the legislation. The seed money will come from savings seen in near-term budgets. Treasurer Raimondo said to fully fund the legislation it would likely cost between $50 and $70 million.
“To what degree we’ll fund the legislation, we don’t know yet. But it will be enough to get the job done. Otherwise we wouldn’t be here announcing it,” said Speaker Fox, who noted the efforts of House Finance Committee Chairman Helio Melo (D-Dist. 64, East Providence) as well as the contributions of other representatives like Ken Marshall (D-Dist. 68, Bristol, Warren).
Rep. Melo, whose committee is charged with finding the necessary seed money for the legislation in the next fiscal budget, also lauded the possibilities of the proposal.
“It’s a great opportunity for the cities and towns of Rhode Island to improve their roads and bridges, and to do it at a low cost,” Rep. Melo said. “We’ll be having hearings on the legislation shortly. We’ll go through the proposal and figure out how to finance it.”
Treasurer Raimondo said if $20 million was entered into the fund at the start, at least $7 million could be loaned out once it is up and running, which isn’t likely to happen until at least early 2014.
Rep. Marshall, who earlier this session submitted a similar piece of legislation, believes the proposal can work. A former Bristol Town Council president, Rep. Marshall has worked with the RICWFA in the past and believes the process can translate easily to roads and bridges.
“It mimics exactly what we’ve done at the municipal level with our water and sewer projects. It’s a no-brainer, really,” Rep. Marshall said. “It’s another tool for cities and towns to sustain and improve their infrastructure while also putting people back to work.”
For struggling cities like East Providence, the ability to draw from a fund backed by the state could save the city several million over the life of the loan. If East Providence, for instance, borrowed $10 million through the fund, it would pay upwards of $2 million less in interest as opposed to what would be necessary attempting to procure the money on its own.
“This is good news. It will allow us to borrow money at a significantly reduced rate of interest so we can finally address the infrastructure of the city,” said East Providence City Manager Peter Graczykowski, who attended the Thursday briefing. “The question is how is the program going to work and how do we get on the priority list.”
Important as well to East Providence and elsewhere, the legislation does not prevent cities and towns from seeking out other sources of funding for infrastructure projects like federal grants.
“We have plenty of work to do so we’re ready when the program is put into place,” Mr. Graczykowski added.
Much of the leg work on the legislation has already been done. Speaker Fox, while trying not to be overly confident, said he believes that enough votes currently exist in both chambers of the General Assembly to pass the proposal.
“We’re working to find creative mechanisms to solve the long-term economic problems of the state,” he added. “We’re putting people back to work while we’re incentivising local communities to deal with their issues pertaining to infrastructure.
“It’s a home run and a real chance for us to deal with these two very important issues.”