Moore: Elorza Should Prioritize Students, Not Trolleys
Monday, May 18, 2015
The fact that students in the Providence School system are forced to walk 2 miles to school and back every day because the city can't afford to transport them is probably a good indication that the city can't afford to go spending money on some shiny new trolleys.
But that point is apparently lost on Mayor Jorge Elorza just like it never dawned on his good friend and predecessor Angel Taveras.
Most people learn the difference between a need (food, shelter, clothing, see: Maslow's Hierarchy), and a want (Ferraris, Armani apparel, summer homes) pretty early on in our lives. The lesson is either taught by our elders, or if we're less fortunate, (or more headstrong), our experiences. The inability to distinguish between wants and needs can quickly put individuals and entities alike in the fast lane to bankruptcy. If the city decides to spend money on a project that's little more than a cool idea that the city can't afford, it might accelerate its march towards insolvency.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTA Cool, But Unaffordable Proposal
The proposal would build streetcar trolleys that would cost a whopping $117 million and create a 2.1 mile line from Brown University to Rhode Island Hospital. To pay for this, city officials are proposing a Tax Incremental Financing Program, commonly referred to as a TIF, which would use the revenue derived from the project to pay for the bond proceeds since the city would have to borrow to pay for the upfront costs. This would be achieved by creating a TIF district to pay for borrowing.
Taxing only a certain portion of the city, to pay for the project, seems like a surefire way for the city to be dragged into court. And what happens if the project doesn't create the tax revenue it was hoping for? Obviously, the project would have to be bailed out by the rest of the city.
There's no denying that the streetcar would be a cool thing to have, and a nice addition to the city's infrastructure. I don't doubt that they'd make the city look quaint, add a certain charm, and offer an affordable and pleasant mode of travel for some folks who live in that small area.
And it would be perfectly logical to support this sort of a project if the city was in a relatively strong financial position.
More Important Priorities
But to hear certain proponents like Mayor Jorge Elorza talk about their support for the project, one would think that the city didn't have school buildings in need of repair, or roads that look they're more suitable for a Third World Country than a modern day American metropolis, or perhaps what's most frightening, a woefully underfunded pension system--which threatens to torpedo the city's finances to the point where, God forbid, it starts bouncing pension checks.
For the fiscal year 2014, which ended on June 30th of last year, the City of Providence's assets were exceeded by its liabilities by roughly $143 million--meaning the city's total nets assets are in the red, thanks to eye popping liabilities like the OPEB (health care benefits for retirees) benefits which pose $1 billion liability.
Further, as Golocalprov Mindsetter and finance professional Michael Riley has pointed out, the city has been borrowing from its own, already woefully short, pension fund since around 2007, at a rate of 8.25 percent. The fact that the city has been borrowing from its own pension fund, at an exorbitant rate illustrates the city's dire financial situation.
While the project would be a nice, shiny, new toy for the city, the current financial picture and shape of our more important infrastructure simply doesn't justify the expenditure. It's time for Mayor Elorza to get his priorities in order.
Russell Moore has worked on both sides of the desk in Rhode Island media, both for newspapers and on political campaigns. Send him email at [email protected]. Follow him on twitter @russmore713
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