Obscure RI disaster board approves $300M in borrowing to keep state afloat

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PROVIDENCE, R.I. (WPRI) — A never-before-convened board of top legislative leaders voted Thursday to borrow up to $300 million to prevent the state from running out of cash because of the coronavirus crisis.

The Disaster Emergency Funding Board, created by an 1973 statute and made up of four top lawmakers, voted unanimously to approve the borrowing at an unusual State House meeting.

The members of the board are House Speaker Nicholas Mattiello, Senate President Dominick Ruggerio, House Finance Chair Marvin Abney, and Senate Finance Chair William Conley. The vote was unanimous among the four Democrats.

Members of the public and the press were not allowed inside the State Room amid efforts to keep gatherings small. Video was aired live and provided to news outlets via state-run TV station Capitol TV.

Gov. Gina Raimondo testified before the board, urging them to approve the borrowing, explaining that the partial closure of the economy has severely impacted tax revenues. The moving of the tax deadline to July 15 will mean some crucial income tax payments won’t come in before the end of the fiscal year on June 30, she said.

The closure of Twin River’s two state-owned casinos because of the virus also means the loss of millions of dollars per month.

The state budget office says the general fund would drop below the state’s usual target of a $40 million minimum by Monday, and would be in the red by mid-April without the borrowed cash.

Raimondo said the money is needed in part to keep paying crucial state workers that are addressing the COVID-19 pandemic such as the R.I. State Police and the Department of Health.

“We have to keep the lights on so we can keep Rhode Islanders alive,” Raimondo said.

Mattiello emphasized that the board was not authorizing new spending — which would require the full General Assembly’s approval — but only allowing the borrowing to cover existing expenses in the state’s current budget, approved by lawmakers last year.

Still, the board itself has been criticized as unconstitutional by the R.I. Republican Party, whose chairperson said state borrowing should be approved by voters.

“A public health emergency doesn’t end our constitutional democracy,” GOP Chair Sue Cienki said. “In Washington, D.C., Congress meets and votes on important legislation to get us through this crisis. If necessary, our General Assembly should quickly convene and vote on any legislation needed to get through Rhode Island through this crisis.” Earlier this week she said the GOP was considering a lawsuit.

General Treasurer Seth Magaziner said the borrowing was backed by an “appropriation pledge” rather than a general obligation pledge, which carries the full faith and credit of the state. He said lenders have already indicated they are comfortable not having the that full pledge because of state’s history of paying off debts.

Cienki criticized the plan, saying it would likely results in a higher interest rate.

“Simple lesson here: when you circumvent the constitution, you pay more,” Cienki said.

Sen. Sam Bell, a Providence Democrat, also said he was concerned about the constitutionality of the disaster board, but he said he would not file a lawsuit and urged the Republican Party not to do so because it would further damage the state’s cash flow.

Bell is also urging General Assembly to reconvene the House and Senate virtually to take further action related to the COVID-19 pandemic.

“I think it’s deeply out of touch for the General Assembly to take action to ensure the cash flow of the state while doing nothing to address the cash flow crisis so many Rhode Islanders are facing right now,” Bell said.

Ruggerio said he is concerned about the safety of convening the General Assembly in person, and said he was looking into the possibility of meeting virtually.

“Some of my colleagues have medical issues, some of them are a little older, such as myself,” he said. “I don’t think at this point in time it would be beneficial for us to come back into this building.”

“We might not be back into this building for the rest of the year,” Ruggerio added.

Mattiello was more hesitant on virtual meetings, and said he was hopeful lawmakers could return to the State House before the end of the session if it is safe to do so.

“There’s nothing like live testimony to understand the pros and the cons of an issue,” Mattiello said. “If we have to do it remotely we will … I’m hoping the time will come where we can come back and work collaboratively in this public building.”

For now, though, lawmakers will be staying away from Smith Hill. A spokesperson announced Thursday the General Assembly sessions and hearings scheduled for next week have been cancelled.

Steph Machado (smachado@wpri.com) covers Providence, politics and more for WPRI 12. Follow her on Twitter and on Facebook

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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