A semiannual “State of the States” report released in October by Conning, a Hartford, Conn.-based investment management firm, ranked Rhode Island 41st, tied with New York, among the 50 states in terms of municipal credit health – a slip of four spots from 37th in their April report’s findings.
Describing the state’s performance as “not horrible,” Paul Mansour, Conning managing director and author of the report, said negative factors impacting the ranking include high debt levels, low job growth and unemployment. The state’s strength, he said, lies in its popular governor, Gina M. Raimondo.
“Simply put, other states are growing a bit faster than Rhode Island,” said Mansour and that, “creating a friendlier business environment would also likely accelerate this process.”
Longer term, he advised the state increase its general reserves to improve its ranking.
So what should Rhode Islanders make of this and other rankings of the state’s financial health?
By themselves, not a lot, says Leonard Lardaro, a University of Rhode Island economics professor.
“Any of these surveys are adding apples to oranges … and have to be taken with a grain of salt, especially short-term changes and transitory factors,” he said.
But, he emphasized that the single, important point to take from them is Rhode Island’s consistently low ranking.
“We don’t do exceptionally well in anything” related to the state’s economic health, he said.
In turn, this impacts the national perception of Rhode Island, which, Lardaro said, is known more for its unemployment than its beaches and quality of life.
Rhode Island, he explained, has been one of the “worst-performing state economies since the Great Recession and we’ve only just started to clean up our act.”
Mansour said the report “is used to help Conning make better-informed investment decisions. … It is not intended to be used for political or governance evaluation.”
General Treasurer Seth Magaziner’s office did take note of the report’s findings.
“Understanding that indicators used in rankings such as these are often looked to by business leaders and potential investors, it is important to know where we stand, as well as where we should look to improve,” said Magaziner spokesman Evan England.
Magaziner’s office is building a municipal debt study through the Public Finance Management Board, which will allow municipalities to access data outlining their outstanding obligations and the state’s debt capacity.
Moving forward, “tools like these will help ensure the balance between borrowing and investment,” England said. •