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Chafee’s Budget Calls for Big Borrowing and Sparks Reaction

Thursday, January 16, 2014


The most daring part of Governor Lincoln Chafee’s budget and his budget speech may have been his ending quote. Chafee’s speech and $8.5 billion proposed budget was safe – it was bit of a surprise for a state that ranks last in economic growth, at the bottom of every business rankings and it tied for the highest unemployment in the United States. The biggest surprise was the amount of borrowing proposed by Chafee.

While Chafee’s proposed budget is safe, his final quote did capture the immortal words of Taylor Swift, “RI’s a good place, a really good place.”

For those looking for bold action and dynamic new policies the Governor’s budget was lacking. For those seeking for caretakers approach, the speech and the proposed fiscal policies were a dream come true.

Big Borrowing is a Big Focus

The biggest winners in the budget may be URI and the environment. Chafee proposed $125 million engineering building for the University of Rhode Island and $75 million bond issue targeting environmental issues was a windfall. Total borrowing as outlined in the Chafee budget was $275 million in new borrowing authority. The General Obligation bond approach was a throwback to the era of big bond issues proposed in the 1980s by then Governor Ed DiPrete.

House Majority Leader Nick Mattiello raised questions about the borrowing strategy, “… there are a lot of bonds proposed, we have to carefully scrutinize any spending.  There are going to be cuts - there's a lot of specifics we didn't get.  I look forward to the finance committee vetting it.” 

Moreover, the borrowing strategy seems inconsistent with the previous Chafee policy of creating dedicated funding for infrastructure financing. Chafee's policy was best exemplified in his fight to implement a toll on the Sakonnet Bridge and to use the revenue to support maintenance.

Reaction to Budget

One of the harshest criticisms of the budget strategy came from Lisa Blais of OSTPA.  “Shameful. All Rhode Islanders deserve more from the Governor's office and our legislature. Where was the road map to dig out of our long term structural deficit? We need more from state leadership than we have seen or we are likely to see if Governor Chafee's presentation is an indication of what our legislators will accomplish in 2014.”

Environmentalists rallied around the proposed environmental bond issues. “Save The Bay thanks Governor Chafee for including this $75 million request in his 2014 budget...Save The Bay is especially pleased to see $20 million in funding for the RI Clean Water Finance Agency to invest in wastewater and stormwater infrastructure, and $31.5 million linked to an array programs designed to restore natural buffers along our rivers coasts, expand floodplains, conserve valuable habitat and support public enjoyment of Rhode Island’s natural resources by investing in parks and recreational facilities like Rocky Point,” said Peter Hanney of Save the Bay.

"Audubon is pleased that Governor Chafee has recommended $75 million in bonds to restore moderately contaminated industrial sites (Brownfields) and to provide monies for municipal water and wastewater infrastructure improvements. These measures will improve health for Rhode Islanders and be attractive to businesses. This is the capital budget, and we look forward to similar focus on environmental protection and enhancement in the operational budget," said Eugenia Marks with the Audoban Society of RI.  

Leading legislators however raised questions about the borrowing, including Senator Lou DiPalma (D).  “I liked the focus on education, job training and infrastructure investment.  The challenge I see is the bonds proposed -- I think we're looking at north of $300 million in investments.  I believe they're the right areas, but it's the magnitude that's the concern."

"The work we've been doing on how to fund our roads and bridges -- we have a $1 billion problem over 10 years.  $80 million is a good initiative, but it's not 1/10 of what we need.  From a roads and bridges perspective, the problem has gotten there from our lack of attention,” said Senator Lou DiPalma.

Senate President M. Teresa Paiva-Weed was supportive of the Governor’s themes, but outlined that the Senate would have their own initiatives this year. “The Governor has made of priority of funding education, and I'm pleased to see his fully funding the $38 million funding formula as well as avoiding increases in tuition in higher education."

"If there was one area where we had an opportunity to infuse money, workforce development is one area I'd like to see a greater investment.  Tuesday we'll be releasing a report, "Rhodes Back to Work," where along with my colleagues we'll release those initiatives,” said Paiva-Weed.

Support from Former Rivals and Mayors

Chafee's former rival and almost opponent before he bowed out of the race for Governor in 2014, General Treasurer Gina Raimondo complemented the Governor on his budget, "I thought he did an excellent job. I admire the Governor, he has dedicated his life to public service and always puts the people of Rhode island first. It's a hard time to govern. I like what I heard in terms of what I heard in investing in the future -- eduction, workforce training. We have to see the details, it's the beginning of a long process."

Another voice supportive of the Governor's budget is Pawtucket Mayor Don Grebien (D) who lauded the approach and the funding for cities and towns. The Chafee budget supports a total of $72 million in municipal aid.  "It was an interesting budget...you have to digest it, but it increases school aid, overall state aid to cities and towns, not a bad budget. I give it a B...once we digest it, it might make it to an A," said Grebien.


Related Slideshow: Best and Worst Run States in New England

How well do the New England states stack up against each other in terms of how they're currently run?

According to Wall Street 24/7, looking at a state's debt per capita, budget deficit, unemployment, median household income, and percentage below the poverty line are all indicators of a state's level operational success - or lack thereof.  

Below are how the New England states were ranked compared to each other, based on data from 2012 -- as well as the "best run" and "worst run" states in the country. 

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Rhode Island

National Rank, #47

> Debt per capita: $8,721 (3rd highest)
> Budget deficit: 6.9% (35th largest)
> Unemployment: 10.4% (3rd highest)
> Median household income: $54,554 (18th highest)
> Percent below poverty line: 13.7% (tied-20th lowest)


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National Rank, #41

> Debt per capita: $8,531 (4th highest)
> Budget deficit: 17.1% (12th largest)
> Unemployment: 8.4% (tied-14th highest)
> Median household income: $67,276 (4th highest)
> Percent below poverty line: 10.7% (4th lowest)


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National Rank, #30

> Debt per capita: $4,447 (12th highest)
> Budget deficit: 16.6% (14th largest)
> Unemployment: 7.3% (tied-22nd highest)
> Median household income: $46,709 (16th lowest)
> Percent below poverty line: 14.7% (tied-24th lowest)


Prev Next


New Hampshire

National Rank, #25

> Debt per capita: $6,414 (8th highest)
> Budget deficit: 20.0% (8th largest)
> Unemployment: 5.5% (8th lowest)
> Median household income: $63,280 (7th highest)
> Percent below poverty line: 10.0% (the lowest)


Prev Next



National Rank, #18

> Debt per capita: $6,414 (8th highest)
> Budget deficit: 20.0% (8th largest)
> Unemployment: 5.5% (8th lowest)
> Median household income: $63,280 (7th highest)
> Percent below poverty line: 10.0% (the lowest)


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National Rank, #6

> Debt per capita: $6,414 (8th highest)
> Budget deficit: 20.0% (8th largest)
> Unemployment: 5.5% (8th lowest)
> Median household income: $63,280 (7th highest)
> Percent below poverty line: 10.0% (the lowest)


Prev Next

Worst Run State in US

50. California

> Debt per capita: $3,990 (20th highest)
> Budget deficit: 27.8% (3rd largest)
> Unemployment: 10.5% (2nd highest)
> Median household income: $58,328 (11th highest)
> Pct. below poverty line: 17.0% (18th highest)


Prev Next

Best Run State in US

1. North Dakota

> Debt per capita: $3,033 (20th lowest)
> Budget deficit: None
> Unemployment: 3.1% (the lowest)
> Median household income: $53,585 (19th highest)
> Pct. below poverty line: 11.2% (6th lowest)



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"For those looking for bold action and dynamic new policies the Governor’s budget was lacking. For those seeking for caretakers approach, the speech and the proposed fiscal policies were dreams come true".
True to RI political "blind man vision" Chafee has sealed his reputation as being the worst possible Governor at a time when RI needed a leader.
Why do we keep hearing work force training as a priority? First we have to get businesses here to have the jobs, nothing on that.
Education is not suffering from spending, it's what and how the teaching is being done. We already spend more per pupil than most states in the USA.
Borrow for infrastructure, give us a break, you mean roads and bridges. Build a business friendly infrastructure with zero taxes and job based credits, it’s that bad in RI and we have to be proactive or we will never get out of this financial hole.
Finally, Chafee will be able to go gaze at the beautiful coast line in his million dollar boat, or his multimillion dollar home and he can write a guest column for tourism, he surely never understood what working people are all about, other than paying taxes.
The same can be said for the GA, empty suites.

Comment #1 by Gary Arnold on 2014 01 16

Raimondo complimented Chafee on the budget? Really? Is she pandering to the 15% of people who would vote for him in her run for governor? In a better economic climate, spending on the environment and education would be fine. This budget and the next governor need to focus on economic development through tax incentives and the streamlining of government red tape. This might cost some money in the short term, but maybe Rhode Island will finally get out of this caretaking mode, which is a ridiculous concept in this state. It's like throwing a blanket over a rusty pile of metal when it's time to melt it down and make something new.

Comment #2 by John Onamas on 2014 01 16

Gary, you nailed it! When at first you don't succeed...keep doing the same things again.

Comment #3 by joe pregiato on 2014 01 16

correction on the Taylor Swift quote

"great place for a vacation home"

Comment #4 by john paycheck on 2014 01 16

Can't wait for this pathetic excuse of a Governor to exit, permanently.
As a voting taxpayer, I will not support any additional bond proposals until the state gets its fiscal house in order. This carousel of borrowing must come to an end.

I become more and more disappointed with Raimondo as each day passes.
It appears the real Gina is emerging now that she seeks the big chair.
The fiscally prudent person she portrayed herself as early in her tenure as Treasurer was clearly a mirage. So will be my vote in September and/or November.

Comment #5 by Walter Miller on 2014 01 16

Despite the relentless and insulting criticism from some, Governor Chafee deserves a lot of credit for starting to turn around a lot of problems he inherited. He has reversed the decline is support for public higher education, local aid, and environmental protection, put RIDOT on more of a pay as you go basis (in contrast to previous Governor who came up with vast new ways to borrow from the future) and generally supported economic measures (such as workforce training) that over time can help our economy. He does seek to limit coorporate taxes and to remain competitive with neighboring states. He has overseen a reasonably successful start-up of the health exchange, appointed good people to many state agencies (e.g. DEM, RIDOT, DOH..) sought to deal with energy and climate change, celebrated our historic resources (supporting hsitoric tax credits) our arts, our diversity, our heritage of separation of church and state, and our spirit.

I agree total debt is a legitimate concern and should be vetted. Of course there are things I disagree with him about (for me, e-verify, paying back the "immoral" obligation bonds, joining the Democratic Party) but on the whole I think we should be quite proud of our Governor.

Comment #6 by barry schiller on 2014 01 16

@ Barry Schiller,
"we should be quite proud of our Governor", are you even slightly serious?

Regrettably, he is a laughing stock across the country who, while possibly well intentioned, has no significant economic accomplishments. Now in his lame duck year, he proposes borrowing upwards of $300M!

Some of his appointments have proven capable but others (political in nature) such as Dir. of Admin. Labor & Training & Health & Human Services, are questionable, at best.

The reason there has been a decline in support for public education is quite simple, it's way too expensive and children are leaving these institutions ill prepared for higher education or career training. He was wrong on e-verify and he is wrong on paying the 38 Studio bonds. All in all, a pretty dismal performance.

Comment #7 by Walter Miller on 2014 01 16

The whole concept that borrowing and increasing budgets comprises a solution -- at a time when RI suffers from one of the worst economies in the nation -- is mind blowing.

Is the governor truly clueless, or does he just want to get as much money into the hands of his friends as possible before he rides off into the sunset?

And what is the supposedly fiscally responsible Gina Raimondo thinking?

Comment #8 by Art West on 2014 01 16

Just what we don't need , low information voters voting yes for a referendum to spend more money. They probably think we don't have to pay it back. Is there anything they won't vote for, perhaps a referendum to build a bridge to nowhere?

Comment #9 by Scott Dickerson on 2014 01 16

And when you combine low information voters AND voters who pay little or no taxes to begin with, you get a continuing downward spiral. Same crap, more debt, different Governor.

Comment #10 by joe pregiato on 2014 01 17

We are already eighth or ninth in the country in state debt load per citizen, and Gump wants to borrow MORE. Last year he and the boyz and girls in the GA hit up the Clean Water Fund for dough to bleep away because it still had a good bond rating. That's about the last of the credit cards, Gump. Gump's idea of managing a budget is to "tell the lackey who writes the checks to send one to the cleaners". Perhaps when the Belo sells off the Providence Pamphlet the influence of the millions in stock Lady Gump owns in the Belo will go with it. . Follow the M O N E Y.

Comment #11 by G Godot on 2014 01 19

Ah' almost FORGOT, Gump's now a DEMOCRAT...so when is he going to start calling for big taxes on the RICH, and,more to the point, when is HE and Lady Gump going to start PAYING those taxes. Slim, BTW, left town.

Comment #12 by G Godot on 2014 01 19

Does Gump dock his million dollar boat at Bend Boat Basin next to Long Face Kerry's SEVEN MILLION DOLLAR plaything? Of course Live Shot Kerry's boat is in RI to avoid sales and property taxes. THAT's "taxing the rich", right Obama?

Comment #13 by G Godot on 2014 01 19

BTW does Foxey have one foot on the bench, or what. "Leader Nickey" seems to be doing all the heavy lifting. Do we detect a "lean and hungry look".

Comment #14 by G Godot on 2014 01 19

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