PENSION OBLIGATION BILL
“If Providence voters approve the $515 million pension obligation bond next week, they will likely end up destroying their city financially.
When the city of Woonsocket tried a pension obligation bond about two decades ago, it led to a financial nightmare and a 23 percent property tax increase in a single year.
Providence’s bond lacks even the minimal safeguards recommended by the General Treasurer such as a 4.5 percent cap on the bond’s interest rate and requiring the investment of the bond proceeds into the stock market to be spread out over a period of time.
Right now, the stock market is at a very high valuation, and there are signs that a recession is coming.
This is not the time to borrow half a billion dollars and put it in the stock market. It is a foolish gamble.
When this gamble fails, it will not only financially ruin Providence, but undoubtedly cause the rest of Rhode Island to be dragged into rescuing the capital city.
Unfortunately, the Elorza administration is taking advice on this bond from the same financial advisors who had to pay out millions when they were sued over their involvement with 38 Studios.
What started out as a non-binding bond referendum, now appears to be binding based on the latest version of the bill headed for a vote in the General Assembly.
Therefore, just a few thousand voters will commit Providence to one of the largest and riskiest bonds in the history of Rhode Island. Three unions have spent tens of thousands of dollars to get voters to approve this bond.
These unions rather have the taxpayers risk a financial calamity than accept any further changes to their pension plans, such as bringing their pensions into line with the state pension plan. They have hired a mail ballot operative, who engaged in questionable tactics during Rhode Island’s census, and they have purchased Walgreen gift cards for the residents of high-rise apartments.
Seeing all this and seeing that others (such as the General Treasurer, and other statehouse politicians) are doing nothing to stop it, I decided to spend some of my own money to warn Providence voters about this dangerous bond.
I am not doing this because I want to run for office.
I am doing this to try to stop a financial fiasco from happening.”