R.I. drops to 42nd in ‘State of the States’ report

RHODE ISLAND fell to 42nd in Conning's semi-annual State of the States municipal credit research report. / COURTESY CONNING
RHODE ISLAND fell to 42nd in Conning's semi-annual State of the States municipal credit research report. / COURTESY CONNING

PROVIDENCE – Rhode Island fell five spots to 42nd in Conning’s semi-annual “State of the States” municipal credit report, which ranks states according to credit health. It was ninth lowest in the nation.
During its April report, Rhode Island fared better, ranking 37th.
“Key measures of overall state credit quality have worsened since Conning’s last report in April 2016,” Paul Mansour, a managing director, head of municipal research at Conning, and lead author of Conning’s State of the States report, said in a statement. “Tax revenues are slowing while state expenditures are picking up, resulting in a drop in aggregate state reserves. General fund balances, an important measure of a state’s fiscal health, have also declined: a healthy figure is 10 percent of annual state general fund expenditures. Yet, as of this report, combined state reserves were estimated to be equal to only 8.9 percent of state expenditures.”
Conning found that Colorado, New Hampshire, Tennessee and Utah were the highest in credit quality, and that common factors among top-ranked states included strong economic growth and diversified economies. It said states with lower rankings tended to face larger legacy costs and have slower-growing economies that have hindered credit improvement.
For example, Rhode Island ranked low due to high unemployment (according to the August rate, which was 5.6 percent) and low personal income growth over the most recent 12 months.

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