Chafee says RI must break the habit of borrowing

In his March 8th budget address, Gov. Chafee made clear that the state needs to break the habit of borrowing money to build roads.

He proposed a transportation infrastructure fund to avoid gas tax increases and wasteful interest payments. The Coalition for Transportation Choices has been working to develop a solution to create stable funding for our roads and bridges and our public transportation system.

That's why CTC is proud to make the Transportation Investment and Debt Reduction Act of 2011, (S148, H5789), the centerpiece of our legislative agenda this year.

You can help pass the Debt Reduction Act by

downloading and filling out our endorsement form and then sending it to info@rictc.org.

Simply put, the bill would fix our current funding system by:

* Generating more money, from new sources, and channelling that money to the Rhode Island Department of Transportation (RIDOT) and the Rhode Island Public Transit Authority (RIPTA); and

* Directly tying increased revenue to a decrease in future borrowing for road repairs and maintenance.

Taken together, these provisions would give the people of Rhode Island safer roads and expanded service from RIPTA.

Here's how Rhode Island's current funding system works, and how the Transportation Investment and Debt Reduction Act of 2011 would fix it.

Rhode Island currently funds transportation through proceeds of the gasoline tax, which stands at 32.5¢ per gallon. RIDOT receives 21¾¢ per gallon (or about $94 million annually), and RIPTA receives 9¾¢ per gallon (or about $40 million annually).

There are two related reasons why this system is unsustainable. First, as cars become ever more fuel efficient, every penny of the gas tax yields less and less money each year. In the last four years, gas tax yield has declined 12.9%, leading to perennial budget shortfalls for RIPTA.

Second, most of RIDOT's share of gas tax proceeds doesn't even go for transportation projects; it goes for debt service, to pay interest on previous transportation bonds. Rhode Island, like other states, gets hundreds of millions of dollars a year in federal highway funds, but, in order to do so, the state must always provide a 20% match. Rhode Island has always borrowed the 20% match through bonding. This constant borrowing creates an ever-growing debt burden for future generations of Rhode Islanders.

The Debt Reduction Act creates new streams of income for transportation funding to supplement the gasoline tax and it channels proceeds to RIDOT (to fix existing roads and bridges), to RIPTA (to finance on-going services and enable expansion), and to municipalities (to fix potholes).

The Debt Reduction Act also requires RIDOT to reduce its future borrowing. For every $10 million received through new funding sources, RIDOT's biannual bond will decrease by $5 million.

The Debt Reduction Act is a win-win-win for the state: it generates more money from new sources, and channels the money to RIDOT and RIPTA; the state's future borrowing (and debt-service obligations) are decreased; and the people of Rhode Island get safer roads and expanded service from RIPTA.

You can show your support for the Debt Reduction Act by downloading and filling out our endorsement form and sending it to info@rictc.org. 

CTC will keep you up to date on the Act's progress and alert you when the hearings are scheduled.