At Thursday’s Senate session, we wore purple to honor International Women’s Day (I also wore it to celebrate Classical High School’s basketball victory) following last week’s celebration of Black History Month. Combining these two occasions, I attended a class yesterday that studied a famous speech by Sojourner Truth, who was a leader in the causes of both abolition and women’s rights. In this week’s letter, I discuss the Commerce Corporation and a bill I introduced this session.
1. The Commerce Corporation
The Senate Finance Committee reviewed the Commerce Corporation budget last week. Among other things, we reviewed the Corporation’s decision to approve the Tidewater Landing soccer stadium bond that requires $132 million in payments over time to provide $27 million in financing, or almost $5 in payments for each dollar of financing, making it the most expensive publicly funded minor league soccer stadium. This results in part from a high interest rate (7.24%), but even at that interest rate, the total financing costs of a 30-year home mortgage would be less than half of what Commerce is paying to finance Tidewater Landing. This decision has raised serious questions concerning its value proposition.
Looking for lessons to learn, I reviewed the minutes of Commerce Corporation meetings over the last two years. I learned that Commerce usually makes decisions with broad consensus – of the 101 substantive votes it took, 95 were unanimous and three more were unopposed with members recusing, leaving only three votes with opposition. Of those three, two received only token opposition, resulting in votes of 5-2 on one matter and 8-1 on another. The only closely divided vote involved Tidewater Landing, when on July 25, 2022, the Governor voted to break a tie to force approval with a 6-5 vote, with one member abstaining and another recusing; i.e. fewer than a majority of the full Commerce Corporation supported the measure.
At the hearing, I recommended to the Commerce Secretary that the Corporation should adopt a two-thirds rule for its votes, as this would not affect 99% of their votes, while causing them to pause before moving forward on the 1% of matters on which they are seriously divided. If Commerce does not set this guardrail on its own, it may be appropriate to advance legislation.
2. Legislative Program
I introduced Bill S-2569 to revise the “state share” component of our education aid funding formula to match that of Massachusetts. Rhode Island calculates the state’s share of each community’s foundation budget by comparing each community’s property tax base per enrolled child (as measured against the statewide average). While this measure is a useful first approximation, the fact remains that some students have greater needs, and their education requires greater local and state resources.
Consider the example of two communities, A and B, each of which has a property tax base of $100 million and an enrollment of 100 students. Suppose, however, that A’s students are all native English speakers from affluent families, while half of B’s students are multi-language learners from households in poverty. As reflected in Rhode Island’s funding formula, Community B’s foundation budget will be at least 20% larger than Community A’s, as “student success factor” will be added to the cost to educate each student who is either in poverty and/or is a multi-language learner.
From this difference in the composition of student population, it follows that Community B will require a larger “tax effort” to pay its share of the cost to educate its resident student population than will Community A. Because Rhode Island’s current funding formula does not account for this difference, our formula would apply the same “state share” to both communities.
In contrast, Massachusetts calculates state share by comparing each community’s property tax base to its foundation budget, rather than its property tax base per student. Adjusting the state share in this way would be largely “expenditure neutral,” i.e., it would not require additional State dollars, but it would redirect significant State aid to communities with students in poverty and multilanguage learners, including Providence.
I have introduced 14 other bills you can view by clicking on this link. In future letters, I will discuss some of these other bills from this list in greater detail.