“So-called “moral obligation” bonds are neither moral, nor a legitimate financial obligation. What they are is a major fraud upon the voters! All such bonds deliberately bypass the official procedures for voter approval of government expenditures. Rhode Island can strike a major national blow against such deliberate fraud by totally refusing to ever pay for it!”
-Mike Rollins LPRI Chairman
Also, This Thursday, May 29th from 4:15-5:30, there will be a protest at the RI State House against the 38 Studios bailout.
It’s important to be at the State House on Thursday.
38 Studios is one of the most shady deals that politicians have done in Rhode Island.
If you can’t make it, please sign and share this petition:
http://petitions.moveon.org/sign/stop-the-coming-38-studios
RSVP to the protest via facebook: https://www.facebook.com/events/508103452649722/
True, not paying the bonds would take a powerful, righteous stand against moral obligation bonds, but the cost to taxpayers would be far more than $89 million, the amount we currently owe bondholders, because of an inevitable lowering of our state’s bond rating. Isn’t paying the bonds then more of an anti-big-government move (counter-intuitively)? Not paying the bonds would have disastrous long-term effects for all Rhode Islanders, most directly in higher taxes lasting much longer than the 7 years it would take to repay the bonds.
Not if you discount the number of future bonds that will be uneconomical due to the higher rate of interest as a result of being downgraded to junk status. The goal of anyone truly anti-gov’t should be not allowing the gov’t to borrow a penny in the future. If we don’t want gov’t doing anything (especially playing financial backer to private enterprise) why would we want them to have favorable borrowing terms for the future?
I agree, we shouldn’t allow the state more room to borrow irresponsibly, but I think we all know the state will continue to borrow anyways. And even if it won’t, which is possible, RI will still have to pay off the general obligation bonds it has been issuing, so cost to taxpayers will still go up to pay for the higher interest rate on those pre-issued bonds. In addition to that cost to taxpayers, businesses won’t come to RI or stay here because they’ll see the default and the subsequent downgrade as indicative of a horrible and unstable economic environment. They’ll think RI to be a high-risk investment prone to higher and higher taxes and costs, which will hurt all Rhode Islanders long-term. Most importantly, won’t a sudden end to borrowing lead to a dramatic raise in taxes to make up for the loss in funds brought in from the yearly borrowing which would be far higher than the $12.5 million it would cost taxpayers every year? Just look at the numbers: $12.5 million in Fiscal Year 2015 to pay back the 38 Studios bonds VS. $60 million in Fiscal Year 2015 (the borrowing amount proposed in the governor’s budget, so a rough estimate of our borrowing next year) in general bond issuing we’d have to make up for if, as you suggest, we force RI to stop borrowing by not repaying the 38 Studios bonds.