The Disaster Emergency Funding Board approves up to $300m in state borrowingSenate President Dominick Ruggerio expressed some reservations, calling the DEFB meeting “an imperfect way” to secure the needed line of credit. The Disaster Emergency Funding Board (DEFB) met in the Rhode Island State House today, gathering together only four members of the Rhode Island General Assembly to pass $300m in flexible, temporary borrowing to help the State get through the
Published on March 26, 2020
By Steve Ahlquist
Senate President Dominick Ruggerio expressed some reservations, calling the DEFB meeting “an imperfect way” to secure the needed line of credit.
The Disaster Emergency Funding Board (DEFB) met in the Rhode Island State House today, gathering together only four members of the Rhode Island General Assembly to pass $300m in flexible, temporary borrowing to help the State get through the economic crunch brought on by the COVID-19 pandemic. The economic crunch is caused by lower revenues as taxes decline and unemployment skyrockets.
After a briefing from Jonathan Womer, Rhode Island’s Office of Management and Budget, followed by a briefing from General Treasurer Seth Magaziner, the four member board, made up of Senate President Dominick Ruggerio (Democrat, District 4, Providence), Speaker of the House Nicholas Mattiello (Democrat, District 15, Cranston), Senator William Conley Jr (Democrat, District 18, East Providence) and Representative Marvin Abney (Democrat, District 73, Newport). Conley and Abney are the finance chairs of their respective legislative branches.
You can watch the board meeting here:
Some members of the four person board expressed reservations about the process.
“We’d all like to be with our colleagues on this,” said Senator Conley, before adding his full support to the effort.
Senate President Ruggerio also expressed some reservations, calling the DEFB meeting “an imperfect way” to secure the needed line of credit.
The four member board then passed the resolution to allow the borrowing, but only after Senate President Ruggerio reminded Speaker Mattiello, who chaired the committee, that a vote was necessary. The vote was 4-0 in favor.
In a press release, Senate President Ruggerio said, “This board has never met before – and hopefully will never have to meet again. It was created for extraordinary times such as these. Action is necessary to ensure that the administration has the tools it needs to manage the state’s cash flow. It is prudent for this board to grant this authority to the governor during these extraordinary times to ensure the state’s liquidity.”
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“The steps taken today are necessary, prudent and limited in scope. These are extraordinary circumstances. We didn’t take this action lightly, but the potential consequences of inaction would be too great,” said House Speaker Mattiello.
According to the press release:
“The vote will allow borrowing for cash flow purposes that must be paid back by the end of the next fiscal year, June 30, 2021. In their remarks today, Governor Raimondo and General Treasurer Seth Magaziner indicated their intention to borrow only what the state needs to offset the cash crunch.
“The vote would allow the state to open a line of credit with lenders and borrow as needed.
“The state has lined up private sources for the funding, but the loans could also come from federal sources if available. While the federal relief package that passed the U.S. Senate last night includes money to help states in their efforts to contain and treat the outbreak, whether the funding can be used to make up for lost revenue or when it would become available for that purpose is not clear.
“Projections compiled by the Office of the General Treasurer, the Department of Revenue and the Office of Management and Budget estimate that the state’s weekly cash balance will dip from $110 million this week to $14 million next week. (The treasurer’s target is to maintain at least $40 million in cash.) Those projections show the state dipping into negative territory by the week of April 17 and hitting a negative balance of $206 million by the end of the fiscal year.“
After the meeting, there was an impromptu press conference that was unaired. During the press conference, Speaker Mattiello seemed to imply that the General Assembly might not meet again this session, saying that the General Assembly “has the technology” but that he’s “resistant to do it because it might not be as transparent as public hearings in person.”
“There’s nothing like live testimony,” said the Speaker, as quoted by WPRI reporter Steph Machado on Twitter.
Senate President Ruggerio said that getting the General Assembly going again is something he is working on. “My concern [is that] everything we do in the General Assembly is and has to be very transparent,” said the Senate President, as quoted on Twitter by WPRI reporter Ted Nesi.
Every teacher in Rhode Island has to work on remote teaching, but the legislature can’t assemble on line?— Steve Ahlquist (@steveahlquist) March 26, 2020