$350 million in bonds to be repaid on June 30, 2010

Providence, RI 7/28/2009 - Rhode Island General Treasurer Frank T. Caprio announced on Tuesday that the State of Rhode Island will be issuing $350 million in Tax Anticipation Notes (TANs) in August. The notes will support the General Assembly's Fiscal Year 2010 (FY 2010) budget.

"TANs are used to cover operating costs in the state budget through the fall and winter months, until the larger corporate and individual tax collections arrive in the spring," said Treasurer Caprio. "In the past, we have been very successful in offering these bonds and they have proved popular with both local retail and the larger institutional investors," said Caprio.

In fiscal year 2009, the State of Rhode Island sold $350 million in TANs, at a rate of 2.2%. The notes were repaid in full with interest on June 30, 2009. The $350 million borrowing in October of 2009 represented 13.9% of prior year's receipts.

This year, Rhode Island will be borrowing earlier due to the availability of better interest rates. "The expected rate in August will be less than 1%, subject to market fluctuation, saving the state substantial interest expense," said Caprio.

The Governor's requested maximum authority in FY 2010 of $350 million would be 14.6% of prior year's receipts.

This compares favorably to the levels in the early 1990's when TANs borrowings ranged from 17% to 20% of prior year tax receipts.

"As one can see by the percentages, the state's current reliance on the sale of TANs is less than our reliance in the early 1990's," said Caprio.

The notes are repaid in full by the end of the current budget year, as is required in the state constitution, which mandates a balanced budget.

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