Continuing his commitment to strengthen Rhode Island's public finances, Rhode Island General Treasurer Seth Magaziner today released the most exhaustive Debt Affordability Study in the state's history, setting new debt affordability targets for the first time since 1999.
"It is imperative that Rhode Island maintain committed to making job-creating investments in infrastructure, school facilities, and other capital projects," said Treasurer Magaziner. "But we also must ensure that we never borrow beyond our means. With the most comprehensive analysis of public debt the state has ever conducted, we are shedding new light on the affordability of public borrowing across the Rhode Island."
The study is on the cutting-edge nationally. Rhode Island's new Debt Affordability Study is the first to set targets that include both debt and pension liabilities together, and the first to include the indebtedness of nearly all issuers, including special districts and quasi-public agencies. The study sets guidelines to protect Rhode Islanders from debt that is out of proportion with their income levels and property values.
In Rhode Island, there are more than 100 entities that can issue public debt, including State itself, municipalities, school, water and fire districts, along with quasi-public entities including the Narragansett Bay Commission, Commerce Corporation, Rhode Island Student Loan Authority, and the Rhode Island Airport Corporation. Combined, Rhode Island public issuers have accumulated more than $10.5 billion of debt.
The findings and guidance provided in this study are a part of the ongoing work of the Public Finance Management Board (PFMB) to provide information that can help Rhode Island communities effectively manage their debt. The study does not recommend a single overall limit for public debt across all issuers. Instead it recommends separate affordability limits for the State, the quasi-public agencies and each municipality.
The Study finds the debt burden of the State of Rhode Island to be manageable but above many national peers, and recommends a slight reduction to the state's prior debt affordability targets. Most municipal borrowers are found to be borrowing within acceptable limits, but the Study notes that some municipal borrowers carry liabilities significantly in excess of their affordability targets.
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About the PFMB The Public Finance Management Board (PFMB) was created during the 1986 Session of the General Assembly to provide guidance to issuers of tax-exempt debt in the State of Rhode Island. In 2016, at the request of the Office of the General Treasurer, the General Assembly enacted a series of measures to strengthen debt management in Rhode Island, including the requirement that the PFMB produce a debt affordability study every two years to recommend limits of indebtedness to all issuers of public debt in the state.