S 3021Public Finance

To Approve and Publish and Submit to the Electors a Proposition of Amendment to the Constitution - Of the Legislative Power

Proposes a constitutional amendment requiring voter approval before state agencies or quasi-publics incur moral obligation debts over $50,000.

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Introduced Mar 5, 2026Committee Senate Finance

Plain-English Summary

This joint resolution proposes an amendment to the Rhode Island Constitution aimed at tightening restrictions on state borrowing. Specifically, it would require both voter and General Assembly approval before any state department, authority, corporation, or quasi-public corporation can incur debt exceeding $50,000 that constitutes a "moral obligation" of the state.

Under the current state constitution, the General Assembly is prohibited from incurring direct state debts over $50,000 without voter consent, except in specific emergencies like war or invasion. However, quasi-public agencies have historically utilized "moral obligation" bonds to bypass this requirement, creating debt that the state is not legally required to repay but feels morally obligated to cover to protect its credit rating. This amendment seeks to close that loophole by explicitly extending the voter approval requirement to these entities and debt structures. By closing this loophole, the legislation aims to increase financial transparency and protect taxpayers from being unexpectedly burdened by the defaulted debts of semi-independent state agencies.

If passed by a majority of the General Assembly, this resolution would place the proposed constitutional amendment on the ballot for voters to approve or reject at the next statewide general election. If approved by the electorate, the new borrowing restrictions would become a permanent part of the state constitution.

For younger readers

This bill asks voters if they want to change the state constitution to control how much money the government can borrow. If passed, state agencies and special government groups wouldn't be able to borrow more than $50,000 without getting permission from both lawmakers and voters first. This helps make sure taxpayers aren't forced to pay for bad loans.

Who & Where It Applies

Impacted groups

Rhode Island taxpayersQuasi-public corporationsState departments and authoritiesRhode Island voters

Constitutional & Fiscal Check

Low. The bill is a legally prescribed joint resolution designed specifically to propose a constitutional amendment to the voters, which is the correct constitutional process.

Estimated cost

Not specified

Estimated revenue

Not specified

Bill Analysis

Both viewpoints

For Progressives

Increases democratic oversight over state borrowing
Prevents corporate welfare schemes funded by backdoor borrowing
Increases transparency in government finance and quasi-public operations
Could hinder the state's ability to quickly fund important public projects like green energy infrastructure
Adds bureaucratic hurdles to routine quasi-public operations like affordable housing development
May limit the state's flexibility to respond to emerging social needs without waiting for an election cycle

For Conservatives

Strictly limits government debt and borrowing capacity
Protects taxpayers from being on the hook for failed quasi-public ventures
Enforces strict constitutional limits on executive and agency power
The $50,000 threshold is extremely low for modern government operations and hasn't been adjusted for inflation
Could force too many minor borrowing questions onto the ballot, causing voter fatigue
Might negatively impact the state's credit rating if agencies cannot secure necessary short-term financing

Votes

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Full Bill Text

Changes to existing Rhode Island law · 10 additions

RESOLVED, That a majority of all members elected to each house of the general assembly voting therefor, the following amendment to the Constitution of the state be proposed to the qualified electors of the state in accordance with the provisions of Article XIV of the Constitution, for their approval, and that it take the place of Article VI, Section 16 and Section 17, which are hereby amended to read as follows: ARTICLE VI OF THE LEGISLATIVE POWER

Section 16. Borrowing power of general assembly. The general assembly shall have no powers, without the express consent of the people, to incur state debts to an amount exceeding fifty thousand dollars, except in time of war, or in case of insurrection or invasion; nor shall it in any case, without such consent, pledge the faith of the state for the payment of the obligations of others. No department or authority created by the state, and no corporation, quasi-public corporation or other entity created directly by the state, shall have the power, without the express consent of both the general assembly and the people, to incur state debts or to incur a debt to an amount exceeding fifty thousand dollars, which would constitute a so-called moral obligation of the state. This section shall not be construed to refer to any money that may be deposited with the state by the government of the United States.

Section 17. Borrowing in anticipation of receipts. Notwithstanding the provisions of Section 16 of this article the general assembly may provide by law for the state to borrow in any fiscal year, in anticipation of receipts from taxes, sums of money not exceeding twenty percent of the receipts from taxes during the next prior fiscal year, and, in anticipation of receipts from other sources, additional sums of money, not exceeding ten percent of the receipts from such other sources during the said next prior fiscal year; provided, that the aggregate of all such borrowings shall not exceed a sum equal to thirty percent of the actual receipts from taxes during the said next prior fiscal year. Any money so borrowed in anticipation of such receipts shall be repaid within the fiscal year of the state in which such borrowings take place. No money shall be so borrowed in anticipation of such receipts in any fiscal year until all money so borrowed in all previous fiscal years shall have been repaid. Provided, no department or authority created by the state, and no corporation or quasi- public corporation or other entity created directly by the state, shall have the power, without the express consent of both the general assembly and the people, to incur state debts or to incur a debt to an amount exceeding fifty thousand dollars, which would constitute a so-called moral obligation of the state.

RESOLVED, That this amendment shall take, in the Constitution of the State, the place of Article VI, Section 16 and Section 17 of the Constitution; and be it further

RESOLVED, That said proposition of amendment shall be submitted to the electors for their approval or rejection at the next statewide general election. The voting places in the several cities and towns shall be kept open during the hours required by law for voting therein for general officers of the state; and be it further

RESOLVED, That the secretary of state shall cause the said proposition of amendments to be published as a part of this resolution in the newspapers of the state prior to the date of the said meetings of the said electors; and the said proposition shall be inserted in the warrants or notices to be issued previous to said meetings of the electors for the purpose of warning the town, ward, or district meetings, and said proposition shall be read by the town, ward, or district meetings to be held as aforesaid; and be it further

RESOLVED, That the town, ward, and district meetings to be held aforesaid shall be warned, and the list of voters shall be canvassed and made up, and the said town, ward, and district meetings shall be conducted in the same manner as now provided by law for the town, ward, and district meetings for the election of general officers of the state.