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Board of Registration of Engineers Section IV Capital Budget Capital Budget Table of Contents Page Summary ............................................................................................................................................... 353 Agency Analyses General Government Agencies Department of Administration ..................................................................................... 365 Executive Office of Commerce ................................................................................... 377 Department of Labor and Training .............................................................................. 379 Department of Revenue ............................................................................................... 381 Office of the Secretary of State .................................................................................... 383 Public Utilities Commission ........................................................................................ 385 Human Services Agencies Department of Children, Youth and Families .............................................................. 387 Department of Health ................................................................................................... 389 Department of Human Services ................................................................................... 391 Department of Behavioral Healthcare, Developmental Disabilities and Hospitals ..... 393 Education Agencies Department of Elementary and Secondary Education ................................................. 397 Public Higher Education .............................................................................................. 401 Rhode Island Council on the Arts ................................................................................ 419 Rhode Island Atomic Energy Commission .................................................................. 421 Historical Preservation and Heritage Commission ...................................................... 423 Public Safety Agencies Office of the Attorney General .................................................................................... 425 Department of Corrections ........................................................................................... 427 Judicial Department ..................................................................................................... 431 Military Staff................................................................................................................ 433 Rhode Island Emergency Management Agency .......................................................... 435 Department of Public Safety ........................................................................................ 437 Natural Resources Agencies Department of Environmental Management ................................................................ 441 Coastal Resources Management Council ..................................................................... 447 Rhode Island Infrastructure Bank ................................................................................ 449 Narragansett Bay Commission .................................................................................... 453 Rhode Island Resource Recovery Corporation ............................................................ 455 Transportation Agencies Department of Transportation ...................................................................................... 457 Rhode Island Public Transit Authority ........................................................................ 463 Rhode Island Airport Corporation ............................................................................... 467 Capital Budget Summary The Governor’s five-year capital budget continues a process that began in 1991 and the capital budget document contains a presentation of the progress that has been made since then in attaining the capital budget goals that were formulated after review of the existing budget process. Most importantly, the document is the result of an ongoing capital budgeting process designed to ensure that there is public disclosure of the projects contemplated, that projects included are sufficiently advanced to lend credibility to the process, and that debt levels are presented and discussed. FY 2017 - FY 2021 Capital Projects by Function Transportation 61.2% General Government 5.8% Human Services Education 1.9% 13.6% Natural Public Safety Resources 3.7% 13.8% 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. Nearly two-thirds of the expenditures are for transportation projects, including roads and bridges, rail, and public transportation. The next largest shares are for natural resources and education project outlays. The three areas account for almost 90 percent of total outlays during the five-year period. Highlights of her capital budget include: Outlays and Funding. The FY 2017 through FY 2021 recommended plan includes $5,443.0 million of outlays on $12,393.3 million of project estimates. Average outlays would be $1,088.6 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 $616.8 million of general obligation bond debt issuances, including $243.0 million approved by voters in November 2014 and $257.5 million from new general obligation bonds to be presented to the voters on the November 2016 ballot. Other Debt Approvals. The Governor recommends $20.0 million to be approved by the 2016 Assembly under the Public Debt Management Act for Quonset pier repairs. Financing. Paying for the five-year outlays includes $1,108.2 million from debt financing and $4,334.9 million from current or pay-go sources. Pay-go represents 79.6 percent with debt funding being 353 20.4 percent. Debt Levels. Total net tax supported debt increases during the period through FY 2021 by $51.3 million from $1,675.8 million to $1,727.1 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 2021 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 $589.4 million. RhodeWorks. After the 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. 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, 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
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