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Sat, 13 Sep 2008
The primary is behind us and the election looms. This November, you'll see a Rhode Island tradition on the ballot: the Transportation bond. Every two years, since at least the DiPrete administration, Rhode Islanders are asked to approve another huge round of bonds for roads. Ho hum, isn't that how people build roads?
Well no. Virtually no other states fund their roads this way. Sure lots of states borrow for a specific highway here or a bridge there. But we borrow for no specific project, an astonishingly wasteful practice.
At this point, DOT borrows about $40 million a year, no matter what. We use that money to match federal dollars that are awarded on the proviso that the state come up with a 10% or 20% match to the funds. We spend the sum on whatever projects are at the top of the list.
Now there are two legitimate reasons for borrowing. You might want to amortize some expense over several years, like when you buy a house. Or you might expect the investment to have a payoff down the road, as with student loans or business investments. But neither of these apply to our roads. That is, our expenses are already amortized -- at $40 million per year -- and none of the road projects on tap involve expanding our transportation capacity. Mostly they involve repairing or replacing what we've already got.
But we can't ignore an important illegitimate reason for borrowing: to hide the true cost of the government people demand. Compared to many other government services, roads and bridges are popular, if expensive. Cars need them, people demand them, and, oh, boy have we built them. We've almost doubled the length of our road system since 1950 and far more than doubled the capacity with lots of big expensive highways.
From what I can tell from old budget documents and DOT reports, the borrowing habit probably began with the construction of the interstate highways. These were good candidates for funding with debt. They were ambitious undertakings that made a tremendous difference in transportation (good and bad). And they also brought rivers of federal cash flowing down the corridors of the state house.
When those projects were completed in the mid-1970's, the torrent of federal money threatened to turn into a trickle, so apparently budget writers at the statehouse decided to keep on borrowing to keep the federal funds flowing. The Garrahy years were tentative, with a few small bond issues, a couple of which were even voted down, but under Ed DiPrete, we started borrowing serious money.
And what a mess we've made with it. Until quite recently, the feds wouldn't pay for maintenance, only new construction and improvements. So we widened and straightened country roads that only needed repaving, put up pointless street lights, and found excuses to replace bridges that needed repairs. All to keep that river of cash flowing.
The new roads not only made big profits for construction companies, but also for a large number of people who owned suburban land. Land developers, mall owners, farmers who sold off a piece of their fields and many more have cashed in since the early 1980's. Land development was a good substitute for industry. Who'd want to spoil that party by putting a price tag on it? Certainly not Ed DiPrete, Lincoln Almond or Don Carcieri. (Bruce Sundlun wasn't suburban, but he cut the borrowing, too.)
By now, the imperative to keep that river flowing at little cost has made a fiscal disaster. The debt has piled higher every year, and we've used serpentine contortions to avoid dealing with it. For example, when debt service threatened to bring the DOT budget into the red in the 90's, an employee-free department of debt service was created to move these payments to a different page of the budget. At $41 million this year, DOT has far and away the biggest chunk of that department.
Counting debt service paid from within the department's budget, we now pay almost $100 million every year in DOT interest payments. How does that make you feel about borrowing $40 million more next year? Do you think that's a sensible way to run the state?
But the worst part is the cynical packaging of the bond referenda. This year's bond is worth $80 million in DOT borrowing, but on the ballot you'll also see $3.5 million each for RIPTA and for a commuter rail station in North Kingstown. When DEM has two or three different projects to fund, they appear in two or three different ballot questions. These transportation projects (whose proceeds don't even go to the same agency) are put together only because the budget writers calculate that the odds of passage are higher if they include a pittance for public transit with the DOT lard.
So how did we get to this pass? Simple: we allowed politicians to pretend they were managing our finances in a responsible fashion while they borrowed way past any reason to spend freely on expensive roads and bridges while pinching pennies on the public transit that could save us all money and time. I'm tired of these games, and intend to vote no on the transportation bond, this November. Please join me.
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