March 20, 2022 Letter

While our hearts continue to go out to the Ukrainians who are stand bravely for democracy and freedom amidst great suffering, we are reminded of how fortunate we are to live our liberal democracy, even with all of its flaws. In that spirit, this week’s letter will discuss the future obligations created by the claimed “one-time” expenditures in the Governor’s ARPA budget. 

As I described in my January 23 letter, the Governor presented three “one time” budgets (federal ARPA funds, federal “capital projects” fund and state surplus) in addition to the traditional annual budget for the General Assembly’s review. (Since that time, we have received a fourth “one time” budget for bipartisan infrastructure funds.) While these “one time” budgets contain a large amount of additional money (almost $2 billion), prudent management requires that it be spent on a “one-time” basis; i.e., that these funds generally not be used in a way that will create programs that require additional funding obligations beyond the exhaustion of the “one time” money. The administration affirmed this principle specifically and clearly in its initial presentation (at Slide 6) that the ARPA proposals “do not lead to outyear budget obligations.” 

In the course of the Senate Finance Committee’s review, however, I began to see contrary indications. For example, on March 10 the administration presented a proposal to use ARPA funds to pay for a “Mental Health Court.” The proposal appeared to be well conceived, and its $1.3 million annual budget was listed as being limited to three years in which ARPA funding is available. I noticed, however, that the proposal included hiring a magistrate. I asked the Judiciary witness to tell us the length of the magistrate’s term. It would be 10 years. I then asked the witness how we were going to pay for the last seven years of that magistrate’s term once the federal funds were exhausted. The answer was that the General Assembly would see the value of the program and decide to incorporate it into future operating budgets. 

I began to ask a similar question for each ARPA presentation, namely what funding obligations the proposal created past the expiration of the federal funds and, if so, how those obligations would be paid for. To each of these inquiries, I received essentially the same answer, namely that the program would prove to be so valuable that the General Assembly would choose to fund it with State operating revenues after the exhaustion of the federal funds. It finally got to the point where I asked the Director of the Office of Management and Budget to prepare a chart listing the future anticipated state funding obligations created by each of the Governor’s “one time” ARPA funding proposals.  The Director agreed to provide me with that list soon.

This year’s budget contains an abundance of “one time” money. We can and should “think big” about the possibilities these additional resources create. With that said, I see value in implementing the Governor’s commitment to fund projects that “do not lead to outyear budget obligations” even if his ARPA budget fails to honor that commitment.  Our State has other competing long-term priorities, such as the Senate leadership’s recent proposal to fund universal pre-K education in Rhode Island over the next five years. These valuable proposals should not be financially pre-empted without due consideration. Also, there are a wealth of critical “one-time” alternatives (such as, for example, increased funding for affordable housing) that do not create the future obligations the Governor’s proposals entail. For all these reasons, I am encouraging my Senate colleagues to consider the future long-term burdens that the Governor’s ARPA programs create for the State operating budget as well the benefits that federal funding can provide in the short term.