East Greenwich Cuts Road Bond Interest Costs

The $2 million road bond that East Greenwich voters approved last November will bring some much needed attention to a number of worn-out town roads.

And as of this week, even more of the money financed by the town will be used to fix roads instead of paying off interest.

On Thursday, the town closed on a $2 million loan from the Rhode Island Clean Water Finance Agency, which means East Greenwich will pay a 1.39 percent interest rate as the project is paid for over the next few years.

The town’s market rate, even with its AA+ bond rating, would be at around 2.14 percent at the low end of the scale for 10-year borrowing, said Finance Director Kristen Benoit.

“We were able to borrow at a very low interest rate due to the Town’s AA+ bond rating and the Rhode Island Clean Water Finance Agency providing an interest rate subsidy,“ Benoit said. “The AA+ rating reflects the Town’s financial reserves, financial stability and continued funding of the Town’s annual pension liability.”

Town Council President Michael B. Isaacs, in a statement, commended the town’s “prudent fiscal management, accomplishments with regard to consolidation and shared services, and conservative budgeting.”

Those practices “are very important factors in maintaining the town’s high credit rating,” Isaacs said.

The town’s road maintenance spending has not kept up with the condition of the roads thanks in part to a difficult economy over the last few years.

The road bond was put out to voters in an effort to avoid spending increases in the town’s annual budget. Last year, Isaacs said cutbacks in both the operating and capital budgets was to avoid drastic cuts in schools and other programs.

With the economy improving and historically low interest rates, officials — and voters — agreed that now would be the time to borrow for road repairs.

The road bond appeared as Question 11 on the ballots of East Greenwich voters. Along with repairs to roads, it mentioned “landscaping of roads, sidewalks and drainage facilities.”

We’re working to get a list of what roads are slated for repair.