NEW YORK – Fitch Ratings has assigned an underlying ‘AA’ rating to the state of Rhode Island and Providence Plantations’ $120,670,000 general obligation bonds, which are expected to be issued Thursday through a syndicate led by UBS Financial Services Inc.
In a news release, Fitch said Rhode Island “has always acted responsibly to protect its debt and financial positions and has long demonstrated both willingness and ability to respond to changing conditions.”
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The release also notes that Rhode Island’s economy has grown and diversified away from manufacturing, “an employment shift that has made the state less vulnerable to economic cyclicality.” As an example of the state’s growing resiliency, Fitch cited the fact that Rhode Island didn’t lose jobs during the recent recession, outperforming both the nation and neighboring states.
The current fiscal year is expected to end with a $12.2 million general revenue surplus, with both revenues and expenditures about 1 percent over the enacted budget, Fitch noted. The budget reserve balance is expected to rise to $90.7 million. The proposed budget for the fiscal year beginning July 1 is balanced, Fitch said, without significant new taxes or spending cuts and with reserves remaining at the statutory maximum of 3 percent of revenues.
Rhode Island’s debt burden, which peaked at 8.5 percent of personal income in 1994, has been steadily reduced to the current 4.8-percent level (based on recently released preliminary 2004 personal income), Fitch noted. The reduced debt burden, largely accomplished through defeasance, controlled issuance, and early retirement of certain debt, is a principal factor in the high-quality credit rating. Net tax-supported debt per capita is $1,671.
