Amid pandemic, RI House, Senate leaders approve $300 million in emergency borrowing
With the state’s economy essentially coming to a screeching halt, House and Senate leadership met Thursday morning to figure out a way to increase the state’s cash flow amid the coronavirus pandemic.
Gov. Raimondo called a meeting of the Disaster Emergency Funding Board and testified alongside General Treasurer Seth Magaziner.
The board was created in 1973. It never met before until Thursday.
The board consists of the House Speaker, Senate President, and the House and Senate Finance Chairs, all Democrats.
The governor sent a letter to the board this week requesting up to $300 million in borrowing from either the federal government or a private entity.
The request comes after Raimondo said the state’s revenue stream has taken a hit.
“Revenues have really taken a plunge. The casino is one of our biggest sources of revenue unfortunately I had to close that weeks ago, restaurants are all closed so we’re all feeling that,” Raimondo said. “We have to keep the lights on so we can keep Rhode Islanders alive.”
Treasurer Magaziner said the state was left with no other choice to help keep on track with the current budget.
“We have taken every measure that is already available to us so we are now requesting the authority to take out a line of credit to help the general fund meet its cash flow needs,” he said.
The board unanimously passed the measure, allowing the state to borrow money up to $300 million for up to two years.
Speaker Nicholas Mattiello was one of four Democrats on the board and said that it’s an extreme decision but it comes at an unprecedented time.
“We have a shut down in the economy, our revenues are sharply falling off, our expenses are increasing,” Mattiello said. “This does not create any additional spending I want to be very clear on that. We authorized short-term borrowing so that we can meet our fiscal obligations and pay our bills.”
The request from the governor comes as sales tax revenues are not meeting projections, the casinos in the state being ordered to shut down, accounting for around $25 million a month, and the tax deadline being pushed back to July.
“They’re going to borrow resources if necessary, as necessary,” Mattiello said. “When they’re in a position to pay them back, pay them down and be able to re-borrow within the time period we gave them authority to borrow.”
House Minority Leader Blake Fillippi agrees with the borrowing but he believes the way the process is set up, and because it’s an emergency, there should be more Republican representation.
“The State doesn’t have the ability to pay its bills. I think we do need to find more liquidity through some type of financing,” Fillippi said. “I believe there’s a way to bring in if not the Full House and Senate, the full House and Senate Finance Committees. And do that in a way that protects everybody. We can do that by meeting in an alternative location like the Dunk.”
Speaker Mattiello disagrees saying that the way the process is set up works, and that Republicans and Democrats are represented, regardless.
“The Speaker of the House represents the entire house both Democrats and Republicans. It’s a nonpartisan position. The same thing with the presidency of the Senate,” Mattiello said.
Treasurer Magaziner said because negotiations are ongoing it’s unclear whether the state will borrow from the federal government or a private entity.
Magaziner said the state will secure a line of credit in a matter of days, with a possible interest rate of three percent annualized.