Hundreds of millions in APRA funds wasted in McKee budget

Dumping once-in-a-generation funding into “infrastructure slush funds” is a bad idea

By Steve Ahlquist in UpRiseRI

Back in October the Rhode Island Foundation released their recommendations for spending the $1.1 billion the state is receiving in American Rescue Plan Act (ARPA) funds. 

Though these recommendations are far from perfect, they do set some expectations as to the cost of dealing with many of the problems facing Rhode Island today, whether it’s housing, mental health services and the opioid epidemic, or small business relief and workforce development.

The Foundation has suggested $405 million for housing, $255 million for behavioral health, and $305 million in workforce development and small business relief.

Other organizations, such as the Rhode Island Childhood Lead Action Project, have advocated for the use of $500 million in ARPA funds to enable “full, free lead service line replacement for all Rhode Islanders.”

BLM RI PAC, the RI Political Co-op, Sunrise Providence, Sunrise RI Youth, Rebuild Woonsocket, and Renew RI want to spend $700 million of the ARPA funds on green, affordable housing.

Homes RI asked that $500 million be sent in the direction of affordable housing.

There are many, many other plans and wishlists out there. Sadly, the needs of Rhode Island are greater than even the billion-plus ARPA dollars available to the state.

Governor Daniel McKee‘s proposed budget ignores these suggestions and underfunds all these ideas. Instead of $700 million or even the $405 million, Governor McKee’s budget earmarks a mere $250 million for housing.

On addiction and behavioral health, instead of $255 million, McKee has allotted a mere $42 million, which nowhere nears the scale of the issue. But on workforce development and small business, McKee has allotted well over $400 million. (If we include Quonset Port improvements and other investments scattered about through the budget the number may be over $500 million.)

If we want to know how much McKee put towards climate change, check out this piece by Kai Salem and Mal Skowron from last week. The Governor’s budget fails in this regard as well.

So where in the McKee budget are the ARPA funds going? If we add up the above, we see that these important and severely underfunded expenditures amount to little more than half of the ARPA monies.

To answer this question, lets take a look at section 12 of the budget bill, beginning on page 40 and at the House APRA Appropriations bill, page 3. Both bills can be thought of as first drafts based on the Governor’s proposed budget, so they are far from final and there is plenty of time to advocate for positive changes.

McKee has dropped over a third of the ARPA funds, $338 million, into infrastructure spending – projects such as the Convention Center, Zambarano Hospital, state offices, State House renovations ($15 million), the colleges and universities, court houses, airports, highway improvements, and other projects.

All these projects are worthy, more or less, but these are the kinds of projects that Rhode Island should be paying for with bonds, voted on by the people. To understand why, we have to understand interest rates and PAYGO.

Back in the 1980s, interest rates were very high. Borrowing money for infrastructure projects was a bad idea because projects would cost more over time. As a result, we began to do these projects by paying as we go – PAYGO – only spending the dollars we had in the moment. Today, interest rates are at historic lows.

It makes much more sense to float bonds to pay for these projects – transportation bonds for highways, green bonds for parks, health and education bonds for Zambarano and the colleges. With inflation and low interest rates, the dollars we pay back in the future will be worth much less than the dollars we borrow now.

Bonding these projects would allow all these infrastructure projects to happen, and allow the state to divert the over $300 million in ARPA funds into projects like housing, healthcare and lead abatement that have been chronically and systemically underfunded for decades, giving the state a huge jumpstart in these areas.

With more than 15,000 Rhode Island families facing evictions this year, and substance use addiction and overdose deaths on the rise, dumping ARPA funds into things like highways and police barrack improvements – especially considering that a separate infrastructure bill with all new federal monies targeting these very issues is coming – is short sighted and frankly stupid.

Rather than making an impact with the ARPA funds, the Governor would allow it to melt away into the kind of small improvements to government buildings, airports and Ports that the average Rhode Islander will never see. McKee plans to dump these once in a generation ARPA funds into an infrastructure slush fund rather than invest in ongoing programs – like Medicaid, improving our responses to behavioral health, or building affordable housing – that could affect the lives of thousands of Rhode Islanders in need.