FOR IMMEDIATE RELEASE
Representative Patricia Morgan Fights for Better Money Management
Bills to Help Local Cities and Towns
STATE HOUSE -- Representative Patricia Morgan (R-District 26 Coventry, Warwick, West Warwick) introduced two bills that will help municipalities manage their bonded debt.
“As a financial advisor, I look for ways to save my clients money. As a representative, I look for strategies to save our taxpayers money,” said Morgan. “Every year, Rhode Island issues millions of dollars of bonds. On occasion, our state refinances these bonds to save money, similar to a homeowner refinancing a mortgage. Our cities and towns refinance debt as well. However, municipalities may not have the volume of bonds to justify the administrative costs to refinance.”
House Bill (H-8054) requests the Department of Administration to study consolidation of municipal debt for the sole purpose of lowering interest and payment costs. Savings achieved will be used to retire current debt.
“This is a great process that can save our towns some serious money,” said Morgan. “The state can bundle smaller municipal debt and refinance multiple debt issues at once. Our cities and towns can pay debt quicker and focus on important issues like education and town services.”
"In many cases, our state has a better bond rating than our cities and towns. Consolidating municipal debt under the state's credit rating in order to take advantage of a more favorable interest rate will save money. These savings would pay off current debt faster, helping our cities and towns achieve stronger financial health. Better money management will help all our taxpayers."
Large new debt issuance comes with big interest payments that increase taxes. However, municipalities should not violate the mandatory four percent tax cap.
The second bill, (H-8053), restricts the new issuance of voter approved bonds until the Division of Municipal Finance has studied the city or town's financial status and determined that new debt will not harm taxpaying residents. Creating proper oversight will help ensure taxpayers are protected.
“Some municipalities currently hold large amounts of voter approved bonds, but have not issued all the debt. The financial world calls this debt, ‘authorized, but unissued debt.’ Unfortunately, not all municipalities have the resources to study the multi-year impact of issuing all that debt at once. Large quantities of debt may lead to a large jump in the tax rate. Our hard working families cannot afford large increases in taxes,” said Morgan.
“Prudent fiscal management is necessary to maintain an affordable balance between debt and revenue that stays within the tax cap set by law without affecting other services. This bill grants authority to the Division of Municipal finance to study valuation and liquidity ratios in conjunction with other operational spending to help municipalities maintain a healthy community."
"Responsible fiscal leadership requires that elected officials use all strategies and new ideas to reduce the tax burden for Rhode Islanders, while maintaining important services. I hope these two bills will be approved to help our communities. Both bills will be heard in House Finance, room 35 of the State House on May 5. I would encourage all of those who agree with better fiscal management to attend this hearing and promote the legislation."