NEW YORK – The city of Woonsocket’s $115 million outstanding general obligation bonds have been rated at “B,” by global rating firm Fitch Ratings. The firm also revised the rating outlook of the city’s bonds from negative to stable.
The revision is evidence of the city’s progress in its five year deficit reduction plan which includes initiatives such as a supplemental tax levy and labor concessions, according to the report.
Fitch said it approved of the state oversight by way of the Budget Commission, expressing that the role the commission will play in restructuring municipal finances and stabilizing liquidity will be central to fiscal recovery.
The deficit reduction plan was developed to eradicate school and city operating deficits by 2017. The projected savings for the plan are $4.7 million, or 6.5 percent of fiscal 2012 expenditures and transfers out. School budget overspending in 2011 and 2012 burdened the city economy. Despite the general fund ending both fiscal years with positive balances, the school fund ended with deficits of 3.1 percent and 14.2 percent of school spending.
The city’s “B” rating indicates various fiscal concerns. Underfunding of retiree obligations, the state property tax cap and the low budget control contributed to the rating as did matters of liquidity.
State intervention has improved liquidity concerns in the short term, however Finch indicated that the there should be a decreased reliance on state aid for cash flow.
Though its reduction plan is on track, the city’s demographics and employment levels are deficient. Unemployment is at 11.4 percent and its population has declined five percentage points between 2000 and 2012.