PROVIDENCE, R.I.-The Providence City Council Finance Committee Thursday introduced
and passed an ordinance that establishes greater taxpayer protections on a $40
million infrastructure bond question slated for the November ballot.
A late submission of a bond request by the Elorza administration stated the
administration was seeking both a 20-year $40 million infrastructure bond at a cost
of $23.7 million and a 1-year $20 million bond anticipation note (BAN) at a cost of
$445k. The proposal was introduced by the administration just a few weeks before the
Secretary of State's ballot question submission deadline and was not mentioned to
the Council during recent budget deliberations. The administration's inability to
provide a detailed spending plan or deliver an accurate list of the city's
infrastructure needs raised concerns among City Councilors about the proposal's lack
of transparency and fiscal accountability.
While the Council acknowledges that infrastructure improvements are needed,
councilors are hesitant to overextend the city's financial capacity, which would
increase borrowing costs. "We want to be good stewards for the people of Providence,
and that requires being fiscally conservative in our efforts and looking ahead to
the city's financial future," said Majority Whip Jo-Ann Ryan. Finance Committee
Chairman John Igliozzi stressed the importance of financial timing: "If the city is
going to issue bonds, we must be diligent in determining if this is the optimal time
for the city."
Tonight, the Finance Committee passed a new ordinance that implements fiscally
prudent controls and prevents the city from incurring unnecessary debt and high risk
loans. The ordinance takes a 3-prong approach to best serve the interests of the
city's financial future and all taxpayers:
1-Demands transparency and spending plan: The ordinance requires that a spending
plan must be thoroughly vetted and presented to taxpayers prior to the November
ballot. Before the bond can receive electorate approval, the Council must approve
the spending plan in a public process.
2-Prohibits risky borrowing: The ordinance mitigates risk by prohibiting bond
anticipation notes, which expose cities to potential financial risks. Committee
members cited concerns about the unknown liabilities surrounding the city's
firefighter litigation, which could further damage the city's bond rating. The
city's credit rating has plummeted in recent years and currently hovers just above
"non-investment grade speculative"-a rating commonly known as "junk." According to
the administration's own NRN report, increasing the city's debt burden will expose
the city to a weakened credit rating. Majority Whip Jo-Ann Ryan echoed similar
concerns: "We're willing to put the [bond] question before voters. We're not willing
to expose taxpayers to bad financial practices like BANs."
3-Reaches every neighborhood: The Elorza administration initially sought upfront
authority to approve bond issuance and complete authority of how the $40 million
would be allocated. Because all taxpayers are required to repay the bond, the
Finance Committee's ordinance mandates equitable distribution of infrastructure
funding to every corner of the city for public infrastructure projects. "We are
guaranteeing that every neighborhood has an equitable share and ensuring that
neighborhood issues will be addressed," said Igliozzi.
With these protective measures in place ahead of the ballot question, the Council
will focus its efforts in the coming weeks to further vet the bond's financial
viability and implications.
