"In her inaugural address this year, Rhode Island Gov. Gina Raimondo called for “new ideas,” because “doing it the way we’ve always done it has landed us here." Unfortunately, Raimondo’s toll plan to repair bridges by borrowing about $600 million without voter approval harks back to the poor fiscal policies that led to Rhode Island’s decrepit infrastructure.
After World War II, Rhode Island embarked on years of highway construction. Some believed this construction should be funded through annual appropriations using gasoline taxes and motor vehicle fees dedicated to highway needs. At the time, Rhode Island was spending a smaller proportion of the revenues it collected from gasoline taxes and motor vehicle registration fees on highways than any other state.
In 1949, Gov. John Pastore recommended dedicating gasoline tax revenues for highway purposes. In 1955, a Providence Journal editorial commented that the state could pay for its highways “if it would stop diverting motor vehicle tax money to non-highway purposes and use it all on roads."
But short-sighted politicians needed gasoline tax revenues and motor vehicle fees to help balance the budget. As a result, Rhode Island began to engage in large-scale borrowing for its roads.
In 1950, the voters approved borrowing $12 million for roads. In 1955, another $30 million was approved. In 1960, another $98 million was approved. Additional borrowing was approved in 1966, 1968 and 1970. Even when tax-weary voters rejected new bonds for transportation in four consecutive general elections from 1972 to 1978, politicians would not stop.
Instead, they decided to hold special elections in 1975, 1977 and 1980 when voter turnout was extremely low in order to win approval for more borrowing for road construction. By 1981, The Providence Journal reported that “nearly half of the entire state debt” was related to transportation, and that Rhode Island was paying “more in debt service to banks than it does towards paying its share of actual road work."
Under Raimondo’s plan, Rhode Island would be partially reverting back to its old borrow-and-build policy because it would not only be spending about $600 million to repair bridges but also spending nearly $600 million on borrowing costs.
The primary justification for borrowing $600 million is an alleged lack of government funds to pay for bridge repairs. For example, Raimondo’s borrow-and-toll legislation, which passed the Senate, acknowledges that “a recurring state source of capital funds has been established," but then states that “there is still a funding gap between the revenue needed to maintain all bridges” and “the annual amounts generated by current dedicated revenue sources."
However, in this same legislation, Raimondo makes this “funding gap” larger. Currently, Division of Motor Vehicles fees are required to be dedicated for transportation purposes starting July 1, 2017. Under Raimondo’s proposed legislation, only 75 percent of various DMV fees would be dedicated for transportation purposes starting in July 2017, with the remaining 25 percent of these DMV fees remaining in the general fund.
Raimondo’s toll plan, thus, is not just about obtaining more revenues to fix bridges but is also about using DMV fees to plug budget holes in the future, just as Rhode Island politicians have done in the past.
Finding about $600 million over the course of 10 years to pay for bridge repairs when the state government currently receives about $3.5 billion annually in general revenues is not a herculean task. Out of the billions in general revenues that the state government collects from taxpayers, less than an additional 2 percent of these revenues would be needed to be dedicated to bridge repairs in order to avoid any new tolls or increases in taxes or fees.
Relying on large-scale, long-term borrowing to repair infrastructure and using DMV fees to plug budget holes is not an innovative idea that will spark Rhode Island’s comeback but a very old idea that has contributed to its decay.
Steven Frias, a twice-monthly contributor, is a regulatory lawyer, Rhode Island’s Republican National Committeeman and the author of "Cranston and Its Mayors: A History.""