PROVIDENCE, R.I. (WPRI) — Gov. Gina Raimondo has asked Rhode Island lawmakers to authorize up to $300 million in short-term borrowing to tide the state over amid unprecedented financial uncertainty due to the coronavirus pandemic.
The money would be borrowed by floating Tax Anticipation Notes, a form of debt backed by the tax revenue expected to flow in later in the same fiscal year. The state was forced to float Tax Anticipation Notes repeatedly in the years around the Great Recession, but has avoided the practice more recently.
The debt request was contained in a proposed budget amendment that the governor’s administration submitted to lawmakers on Thursday. The money would have to be repaid by the end of the fiscal year next June 30, and the state could use “interest earned on the idle proceeds” to offset some of the cost of borrowing, according to a memo that accompanied the amendment.
The budget amendment would also rescind a March 26 resolution passed by the Disaster Emergency Funding Board, an obscure state panel made up of four Democratic legislative leaders, that allowed state officials to get up to $300 million in lines of credit for immediate cash flow needs as revenue collapsed due to the pandemic. Only a small amount of the authority had been used at last check.
“Given the uncertainty surrounding a potential future stimulus package from the federal government this year, the state is ensuring it has as many options as possible for Fiscal Year 2021,” administration spokesperson Robert Dulski told WPRI 12. “Tax Anticipation Notes have been included in the proposed FY21 budget as an option to even out cash flow as necessary in 2021.”
Raimondo and legislative leaders have agreed to put off completion of a state budget for the new 2020-21 fiscal year — which began last week on July 1 — until Congress decides whether to enact a new federal relief bill that could include additional funding for states. GOP Senate leaders in Washington have indicated they expect to take action later this month.
In the meantime, state government agencies are continuing to operate off last year’s funding levels until a new budget is enacted. Legislators are taking a similar approach in Massachusetts, where an interim budget was passed to cover expenses during July.
The House Finance Committee and its Senate counterpart are both scheduled to hold hearings on the budget situation this week, as well.
Also on Thursday, the governor’s office requested a budget amendment to authorize a 10-year lease to rent 14,700 square feet of space at a building at 95-117 Main St. in Woonsocket that would house a Northern Rhode Island and Woonsocket Education & Industry Center operated by the Council on Postsecondary Education.
The rent would start at $180,600 and rise to $247,000 at the end of the lease. The property is owned by S-95 Main Street Woonsocket LLC, a corporation based in Jamaica Plain, Massachusetts, according to records at the secretary of state’s office.
Ted Nesi (email@example.com) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook