$150M or $180M? With potential of more state aid, should panel consider higher cap?

The Town Council could not come to agreement Monday night on what the cap should be for a possible school bond referendum. Not that it is approving school bond referendum language now – that’s part of the challenge. What it has to do now is ask the General Assembly to approve a not-to-exceed number for a bond referendum the town wants to put before voters in November. 

It’s like getting pre-approved for a mortgage – you aren’t exactly sure how much you will need because you haven’t found a house yet, but you try to get approval for the most expensive house you could possibly consider.

The School Building Committee has been honing in on a plan with an upwards cost of $150 million – which would include two new elementary schools and renovations at Meadowbrook and EGHS. (The building committee is advisory only; it will be recommending an option to the School Committee which, if approved, would then go to the Town Council for approval. In other words, there is a ways to go here.)

Two councilors – Mark Schwager and Mike Donegan – advocated keeping options open, especially in light of several pieces of legislation circulating in the General Assembly this session that would boost state reimbursement for school construction. The not-to-exceed number they were comfortable with: $180 million. Donegan said he would even consider $200 million, but the conversation centered around $180 million.

The other two councilors at the meeting Monday night  – Renu Englehart and Michael Zarrella (Caryn Corenthal was absent) – were more disposed to a bond cap of $150 million, or maybe even $130 million.

The General Assembly bills behind Schwager and Donegan’s thinking, if passed (and that’s a big if) could mean East Greenwich would be able to see state reimbursement for school construction costs go from 50 percent to 60 percent or maybe even 65 percent. 

In other words, under the current reimbursement rules, if voters approve a $150 million bond, the ultimate cost to the town could be around $75 million. If EG is suddenly able to get reimbursed for 60 percent of its school construction costs, then the town would be on the hook for $60 million; at 65 percent, the town would pay $52.5 million. 

“I would support not closing the door on taking advantage of that reimbursement,” said President Mark Schwager.

Town Council Vice President Mike Donegan said he thought they should keep all their options open at this point and set a high “not-to-exceed” number. 

“We’re not here tonight to decide what to put on a bond referendum,” said Donegan. “Our goal tonight is to provide maximum flexibility.”

For Englehart and Zarrella, however, if they didn’t think they would ever vote to put a $180 million bond referendum on the ballot, why vote to authorize up to that amount? 

Zarrella said he worried putting a big number out there – even if it’s not the final number – could set voters against the project before it was even explained. 

“I think if you put a really high number out there, residents will lock into that number. I think people will read the headlines and they won’t read the article,” he said. “The worst thing we can do is to put a bond out there that doesn’t pass, because then we get nothing.”

Englehart said even with a higher reimbursement, she was concerned the school borrowing would squeeze out other long-needed town projects, including road work, and waterfront and community services improvements. Zarrella echoed that concern. 

Schwager said it might be, when push comes to shove – aka, it’s August and they have to approve what will actually go on the ballot – the fiscal impact would show that a number lower than $150 million was necessary. But, he and Donegan argued, why not at least leave the possibility of a larger bond now?

Town Manager Andy Nota declined to make a specific recommendation but did say a larger reimbursement with a larger bond would be “transformative.”

After more than two hours of discussion, the council decided it was not yet ready to vote and scheduled a special session Monday, April 3. All five council members should be in attendance for that meeting.