PROVIDENCE, R.I. (WPRI) – Governments at all levels in Rhode Island have accumulated a combined $10.5 billion of debt, and a handful of municipalities’ liabilities are alarmingly high, according to a new study by General Treasurer Seth Magaziner’s office.

The debt affordability study, Rhode Island’s first since 1999, is an ambitious 130-page report that attempts to track public borrowing at all levels, from the state government itself to quasi-public agencies, cities and even small fire districts. It also suggests new targets for maximum sustainable debt. A draft version was presented to the Public Finance Management Board this week.

“We put out this report because we want it to shine a light on public borrowing in Rhode Island, the good, the bad and the ugly,” Magaziner, a Democrat, told Eyewitness News. “And there’s plenty of all three.”

Magaziner said his office believes the new report is also the first debt affordability study in the country that incorporates unfunded pension obligations. “How can you know how much debt you can afford without looking at whether you have a tiny pension liability or a huge pension liability?” he asked.

The $10.5 billion in total public debt – excluding pensions – breaks down as $1.9 billion for Rhode Island state government, $6.6 billion for quasi-public state agencies such as Rhode Island Housing and Commerce RI, and nearly $2.05 billion for municipalities and local special districts. With pensions, the combined total rises to $17 billion, Magaziner’s office said.

“I think the result clearly shows that many of the entities that are borrowing are doing so with an affordable level, a sustainable level,” Magaziner said. “And then there are some outliers that clearly are not sustainable and are in quite a concerning situation.”

Among the outliers: the cities of Providence and Woonsocket. The study suggests a community’s debt and pension liabilities should be less than 6.3% of its total assessed property value; in Providence that ratio is 17.8%, and in Woonsocket it’s 20.3%. Central Falls, Pawtucket, Johnston, West Warwick and Cranston are also above the target.

“I don’t think it will be a shock to anyone that Providence and Woonsocket have very high liabilities,” Magaziner said. “We’ve known generally this is a problem.” He added, “These problems were many decades in the making and it will take some time to bring these liabilities down to more appropriate levels.”

The study’s breakdown of municipal liabilities indicates unfunded pension obligations are generally a more significant burden than traditional debt.

At the state level, Magaziner said the study shows Rhode Island is “slightly higher than the national median, but we are in much better shape than some of our closest neighbors including Massachusetts and Connecticut.”

“There isn’t a huge cause for concern at the state level,” he said.

Still, the report suggests lowering the state-level debt target from 7.5% of general revenue to 7% over the next five years; other New England states’ targets range from 5% in Maine to 10% in New Hampshire.

As part of the study, Magaziner’s office asked the Center for Retirement Studies at Boston College to develop a standardized measure of pension liabilities across all 50 states, taking into account that some places report lower shortfalls by projecting rosier investment returns in the future or planning to fill the gap over a longer period of time.

The BC numbers show Rhode Island’s state-level liabilities are at the higher end among states, but still well below the most indebted states such as Illinois, Connecticut, Kentucky and Massachusetts. The study finds Rhode Island’s annual payments for pensions and debt service total 12.1% of its revenue, while Connecticut’s total nearly 30%. Magaziner noted the state would be spending about $200 million a year more on pensions if not for the 2011 retirement-system overhaul.

“If you look at the totality of the report, the state’s not the biggest problem,” he said.

Among quasi-public agencies, the study singles out a few causes for concern. The first is the Narragansett Bay Commission, which handles wastewater treatment in northern Rhode Island. While the study finds its current debt level is sustainable, the commission is currently looking to borrow hundreds of millions of dollars for the third phase of its long-running Combined Sewer Overflow (CSO) project.

“What we’re going to have to look closely at with the Narragansett Bay Commission is, their service area includes some of the state’s lowest-income communities – will those communities be able to afford whatever rate increase will be necessary to service that amount of debt?” Magaziner said.

The other two quasi-public agencies cautioned in the study are the Rhode Island Resource Recovery Corporation, which manages the state landfill, and the Rhode Island Airport Corporation, which manages T.F. Green. The report recommends the landfill agency not issue further debt until its determines what to do once its current space fills up, and suggests the airport’s debt per passenger is too high, though that would come down if volume improves.

While the treasurer’s office was able to secure debt and pension information from nearly all of the more than 100 jurisdictions with public borrowing authority in Rhode Island, a small number of local housing authorities are not included. Magaziner said numbers were not readily available from them, though he hopes they will be incorporated into the next affordability study in 2019. His office also opted not to include liabilities for other post-employment benefits (OPEB), primarily retiree health coverage.

Magaziner said he hopes the new study will be useful to policymakers and residents.

“I think a lot of times when you talk about debt and pensions, people’s eyes glaze over and it doesn’t feel tangible to people,” he said. “I hope one of the things that helps with putting these things out there is by making things more concrete to people.”Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter and Facebook