R.I. improves ranking in Conning’s State of the States report

RHODE ISLAND ranked No. 34 in Conning's June State of the States report measuring municipal-bond credit quality.
RHODE ISLAND ranked No. 34 in Conning's June State of the States report measuring municipal-bond credit quality.

PROVIDENCE – Rhode Island ranked No. 34 on Conning’s State of the States report, released on Tuesday, that measures municipal-bond credit quality.

Rhode Island’s ranking improved from No. 47 one year prior and No. 38 two years ago.

Conning is an investment-management firm that serves the insurance industry.

The report measures state credit quality across several metrics, including economic activity, tax climate, population growth, tax revenue and debt, among others.

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Rhode Island ranked No. 4 among New England states this year, ahead of Connecticut (No. 40) and Vermont (No. 35), and behind New Hampshire: (No. 17), Massachusetts (No. 22) and Maine (No. 31).

This year, Rhode Island ranked highest for employment growth (No. 4), gross domestic product growth (No. 11) and home price index growth (No. 15). The state ranked lowest for personal income growth (No. 47), reserves and general fund expenditures (No. 44) and debt per capita (No. 41).

Utah had the highest ranking this year, while Kentucky ranked lowest. Utah has ranked highest on the Conning report for five straight years.

Many of the indicators in the report include data from before the economic impacts of COVID-19, either reflecting 2019 or early 2020. The report said that state credit quality was the strongest it had been in a decade, but the impact of COVID-19 has pushed Conning to revise its outlook to negative, with indicators of the report expected to worsen over the next 12 months.

“States entered 2020 with stronger reserves than they had prior to other downturns and most states experienced positive tax revenue growth in 2019. However, the long-term impact of the COVID-19 pandemic on states’ credit quality will be significant,” said Karel Citroen, head of municipal credit research at Conning and lead author of the report. “States are facing an uphill battle, with decreased sales and income tax revenues. They will have to address funding gaps by either using reserves, issuing debt, reducing expenditures and/or increasing revenue. That is why we analyze the strength of balance sheets, economic conditions and socio-economic trends, because they could offset some of the current concerns.”

The full report may be found online.

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