General Assembly Approves Revolving Fund For Roads, Bridges in FY2014 Budget

PROVIDENCE, RI– The creation of the Municipal Roads and Bridges Revolving Loan Fund – a key element of the House leadership’s economic development package – passed the General Assembly today as part of the Fiscal Year 2014 budget. Backed by Speaker of the House Gordon D. Fox (D-Dist. 4, Providence) and General Treasurer Gina M. Raimondo, Article 20 of the budget establishes a fund to help municipalities make major road repairs at lower borrowing costs than those that could be achieved on an open market.

“Having a predictable source of revenue to improve our infrastructure in Rhode Island is an essential piece of the economic puzzle,” Speaker Fox said. “It’s no secret that our roads and bridges need work. There are a lot of variables that have contributed to that over the years, but the state’s previous approach to funding will no longer be one of those factors. This is going to create opportunities for the steady growth of our economy and the addition of jobs. More importantly, the system will be sustainable. General Treasurer Raimondo added, “The Municipal Road and Bridge Revolving Fund incentivizes municipalities to invest in their infrastructure and puts people to work. It is a long-term solution that can last into perpetuity. My office will continue to work with all parties to ensure this program is implemented successfully.”

The proposed Municipal Road and Bridge Revolving Fund calls for the program to be administered by the AAA-rated Rhode Island Clean Water Finance Agency. The fund would be initially capitalized using almost $7 million of bond premium proceeds transferred from the Rhode Island Capital Plan fund with the intent of dedicating future premiums and other resources that may be appropriated to the fund. Annual disbursements from the fund cannot exceed $20 million, and no more than 50 percent of available funding in any calendar year may be dedicated to any one city or town. The only exception would be if there were no remaining eligible projects.

Lowering the annual debt service payments also provides budget relief for municipalities and creates opportunities for the construction trades and their suppliers. On several levels, inclusion of the revolving fund in the budget also continues the momentum of pension reform. Investors viewing the state in a positive light can make it possible for it to affordably access bond markets that are crucial for infrastructure funding.