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Section IV Capital Budget Capital Budget Table of Contents Page Summary ............................................................................................................................................... 371 Agency Analyses General Government Agencies Department of Administration ..................................................................................... 383 Executive Office of Commerce ................................................................................... 395 Department of Labor and Training .............................................................................. 399 Department of Revenue ............................................................................................... 401 Office of the Secretary of State .................................................................................... 403 Public Utilities Commission ........................................................................................ 405 Human Services Agencies Department of Children, Youth and Families .............................................................. 407 Department of Health ................................................................................................... 409 Department of Human Services ................................................................................... 411 Department of Behavioral Healthcare, Developmental Disabilities and Hospitals ..... 413 Education Agencies Department of Elementary and Secondary Education ................................................. 417 Public Higher Education .............................................................................................. 421 Rhode Island Council on the Arts ................................................................................ 441 Rhode Island Atomic Energy Commission .................................................................. 443 Historical Preservation and Heritage Commission ...................................................... 445 Public Safety Agencies Office of the Attorney General .................................................................................... 447 Department of Corrections ........................................................................................... 449 Judicial Department ..................................................................................................... 453 Military Staff................................................................................................................ 455 Rhode Island Emergency Management Agency .......................................................... 457 Department of Public Safety ........................................................................................ 459 Natural Resources Agencies Department of Environmental Management ................................................................ 463 Coastal Resources Management Council ..................................................................... 471 Rhode Island Infrastructure Bank ................................................................................ 473 Narragansett Bay Commission .................................................................................... 477 Rhode Island Resource Recovery Corporation ............................................................ 479 Transportation Agencies Department of Transportation ...................................................................................... 481 Rhode Island Public Transit Authority ........................................................................ 487 Rhode Island Airport Corporation ............................................................................... 491 Capital Budget Summary The Governor’s five-year capital recommendations for FY 2017 through FY 2021 call for total outlays of $5,443.0 million for the period. Financing the plan requires $1,108.2 million of debt issuances and $4,334.9 million from current revenue streams. Governor FY 2017 - FY 2021 Capital Projects Funding RI Capital General Revenues 10.8% Other Financing 0.2% 7.0% Other Tax Supported 2.1% Federal 34.8% COPS 0.7% General Obligation 11.3% Private & Other 34.0% The Assembly’s adopted plan includes capital outlays of $5,444.5 million for the period. Financing the plan requires $1,083.2 million of debt issuances and $4,361.3 million from current revenue streams. Assembly FY 2017 - FY 2021 Capital Projects Funding RI Capital General Revenues 11.3% Other Financing 0.2% 7.0% Other Tax Supported 2.1% Federal 34.8% COPS 0.7% General Obligation 10.8% Private & Other 34.0% Outlays and Funding. The FY 2017 through FY 2021 plan includes $5,444.5 million of outlays on $12,377.4 million of project estimates. Average outlays would be $1,088.9 million per year for the five- year period with $1,014.3 million required at the end of the period to complete the projects. General Obligation Bonds Referenda. Financing the five-year plan is based on $586.8 million of general obligation bond debt issuances, including $243.0 million approved by voters in November 2014 and $227.5 million from new general obligation bonds to be presented to the voters on the November 2016 371 ballot. Debt service on these bonds is paid from state general revenues, and once all are issued the annual debt service is estimated to be $18.8 million. Other Debt Approvals. The plan also requires up to $25.0 million, approved by the 2016 Assembly under the Public Debt Management Act for Quonset pier repairs. Financing. Paying for the five-year outlays includes $1,083.2 million from debt financing and $4,361.3 million from current or pay-go sources. Pay-go represents 80.1 percent with debt funding being 19.9 percent. Debt Levels. Total net tax supported debt increases during the period through FY 2021 by $50.8 million from $1,675.8 million to $1,726.2 million. Past practice indicates that debt levels will be significantly higher as more projects are added within the five-year period of this capital budget. Debt Ratios. Net tax supported debt would decrease from 3.6 percent of personal income reported for FY 2015 to 2.9 percent into FY 2017 before dropping gradually back to 2.6 percent in FY 2020 assuming that the capital budget is not increased. However, as with debt levels, past practice indicates it is likely to be higher than projected. Rhode Island Capital Plan Fund. The plan relies heavily on the use of Rhode Island Capital Plan funds, an important source of pay-go funds designed to reduce the need for borrowing. Total outlays for the five-year period are $615.9 million. RhodeWorks. After the FY 2016 budget was submitted, the Assembly adopted new RhodeWorks legislation in 2016-H 7409, Substitute A, as amended that the Governor signed into law on February 11, 2016. The capital budget was adjusted to include toll revenue and Grant Anticipation Revenue Vehicle (GARVEE) bonds authorized in the legislation. In the total outlays mentioned above, $545.5 million is from funding authorized as part of the RhodeWorks legislation. FY 2017 - FY 2021 Capital Projects by Function Transportation 61.2% General Government 5.8% Human Services 1.9% Education 13.6% Public Safety Natural Resources 3.7% 13.8% Outlays and Funding In order to support the maintenance, repair and construction of infrastructure throughout Rhode Island, the state has utilized both funding and financing for infrastructure. Funding can be considered as “pay-go”, which means that annual budgets include sufficient appropriations for projects to continue on schedule, 372 without incurring long term debt. For Rhode Island, this is accomplished primarily through the Rhode Island Capital Plan Fund, which is described in greater detail elsewhere in this report. The advantage of this approach is that it does not limit future resources by incurring long term debt service payments; however, it does limit the extent of what can be accomplished to currently available sources. Because of this, short-term projects for relatively smaller amounts of money, such as asset protection projects, are better suited for pay-go funding, while long term and large scale infrastructure projects, such as the relocation of Interstate 195, are better suited for financing. Financing capital projects includes borrowing, usually in the form of long term debt such as general obligation or revenue bonds. General obligation bonds are backed by the full faith and credit of the state, with annual debt service appropriated from general revenues. This type of borrowing is more closely related to state agencies, and the authorizations for this debt appear as referenda on election year ballots. Revenue bonds are not backed by the full faith and credit of the state, and debt service is paid from a defined revenue stream, such as a user fee. This type of debt has historically been used by quasi-state agencies to fund long-term infrastructure projects. For example, the Turnpike and Bridge Authority uses toll revenue to fund the maintenance of the Newport Pell Bridge. Compared to pay-go funding, financing does not require large up-front investments in order to complete large projects; however, by the time the financing has been completed, issuance and interest costs can significantly add to a project’s total cost, and may also require payments long after a facility has been constructed. The total five-year outlays of $5,444.5 million are supported by a mix of pay-as-you-go funding and financing. Over three-quarters, 80.1 percent of outlays, are supported by current revenues,
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