By Katherine Gregg Journal Political Writer
PROVIDENCE — No legal opinion is necessary, a spokesman for Gov. Gina Raimondo said Wednesday amid questions about the constitutionality of four top-ranked legislative Democrats, on their own, approving $300 million in state borrowing.
The state revenue director in former Governor Donald Carcieri’s administration urged Raimondo to seek an advisory opinion from the Rhode Island Supreme Court or short of that, from the attorney general.
“Such a legal opinion may be helpful when the state goes to the financial markets during this period of economic stress resulting from the coronavirus pandemic,” said Carcieri-era cabinet director Gary Sasse.
“Without a credible legal opinion to explain how this borrowing is constitutional, I wonder what reputable lender would loan Rhode Island this money at a low interest rate?” added Steven Frias, the Rhode Island GOP’s National Republican Committeeman.
The response? “We are relying on a duly enacted statute that spells out what needs to be done to fund disaster emergencies like the one we are now encountering,’’ Raimondo spokesman Josh Block said Wednesday.
“We are following the mandates of that statute,’’ he said.
The questions center on the first-ever meeting scheduled for Thursday of the obscure Disaster Emergency Funding Board, made up of four top Democrats: the House speaker, Senate president and the chairmen of the House and Senate finance committees.
Raimondo is seeking approval to borrow as much as $300 million for up to two years and also to scoop, or temporarily borrow, money from other state funds to pay bills and make payroll, including some or all of the $216 million in bond proceeds in a capital fund and $234 million in university and colleges reserves.
“The line of credit will be used to meet cash flow needs,’’ said state Treasurer Seth Magaziner’s spokesman Evan England. “While we are requesting authorization for up to $300 million, we will only borrow as much as necessary to meet the state’s cash flow needs.”
But Rhode Island Republicans have questioned whether the 1973 state law creating the board can override the voter approval the state Constitution requires for most state borrowing “except in time of war, or in case of insurrection or invasion,” and the required repayment within the same fiscal year of “tax anticipation notes.”
In written testimony submitted a day ahead of the meeting, which will be remotely broadcast, Sasse, the one-time head of the Rhode Island Public Expenditure Council, said:
“Article VI, Section 17 of the Rhode Island Constitution permits the State to borrow funds in anticipation of receipts. However, the Constitution stipulates that such borrowing must be paid back in the fiscal year that the borrowing occurs.”
“The powers granted to [the Disaster Emergency Funding Board] appear to be in conflict with Article VI of the Rhode Island Constitution,’’ he wrote.
Beyond seeking a legal opinion, Sasse urged the governor — and the lawmakers — to consider “fiscal realities,’’ including the imminent passage of a $2-trillion stimulus package by Congress.
While Rhode Island’s share has been estimated at $1.25 billion, it remains unclear whether it will cover the hundreds of millions of dollars in delayed or foregone revenue from shuttered shops, businesses and casinos.
“The projected fiscal impact of this additional federal aid on Rhode Island would be useful information,” Sasse wrote.
Added Frias: “Four people are getting together to decide whether the state should borrow $300 million when the public has no idea what this borrowing plan is, how much it will cost, whether it is constitutional, what the money will be spent on, or even what the financial condition of the state actually is.
“Maybe it’s just me, but I think there is something wrong with how we do things in Rhode Island government,’’ he said. kgregg@ providence-journal.com
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