R.I. improves in ‘State of the States’ report

THE SEMI-ANNUAL 'State of the States' report showed that Rhode Island ranked 40th, an eight-spot improvement over last year's rank. The change was fueled by an improvement in home prices and a reduced burden of future pension costs, the report said. / COURTESY CONNING
THE SEMI-ANNUAL 'State of the States' report showed that Rhode Island ranked 40th, an eight-spot improvement over last year's rank. The change was fueled by an improvement in home prices and a reduced burden of future pension costs, the report said. / COURTESY CONNING

PROVIDENCE – A “State of the States” municipal credit report showed that Rhode Island ranked 40th, an eight-spot improvement over last year, although still 11th-worst among the 50 states.

The report said states have had limited success in reducing the burden of growing pension costs on municipal governments, with the exception of Rhode Island.
The report also said that the Western states, as well as Florida, have had faster growth than their Eastern counterparts. Overall, it found that economic growth and cautious spending have led to improved state quality.
Rhode Island, Massachusetts and New Hampshire were included in a category of “improving states.” Massachusetts was singled out for “impressive job growth” over the past year, along with its general fund balance. New Hampshire was highlighted for tax revenue and employment growth.
The goal of the report, according to Conning, “is to be an accurate predictor of future state credit quality.” State of the States indicators include measures of economic activity such as income levels, housing prices, foreclosure rates, as well as a state’s overall business environment.
“States are achieving balanced budgets through a combination of employment growth, GDP growth and improved housing prices,” Paul Mansour, managing director, head of Conning’s municipal credit research group and the report’s lead author, said. “Additionally, while most states have been able to keep the rate of expenditure growth below the rate of state tax revenue growth, some states continue to be weighed down by high legacy costs, including high debt and unfunded retirement costs.”

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