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

RHODE ISLAND ranked 34th in Conning’s latest State of the States municipal credit research report released this week. /COURTESY CONNING
RHODE ISLAND ranked 34th in Conning’s latest State of the States municipal credit research report released this week. /COURTESY CONNING

PROVIDENCE – Rhode Island ranked 34th in Conning’s latest State of the States municipal credit research report released this week.

The semi-annual report showed that Rhode Island improved eight spots from October, the last time Conning, a global investment management firm, issued its findings on credit quality. Rhode Island, along with New York, experienced significant improvement over the last six months, the report said.

Thirteen credit indicators were used to rank the states. Rhode Island scored high – 16th – in fiscal 2016 general fund balance as a percentage of general fund expenditures, 16th in fourth quarter per capita income and 22nd in one-year home price change covering the quarter that ended in December.

Other factors also were used in the rankings, including unemployment rate (R.I. ranked 26th), population growth (45th), employment growth (32nd) and personal income growth (28th).

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Despite the Ocean State’s improvement, the report found that overall state credit quality declined in the past six months. It said that in general, states have not made much progress in solving their fiscal problems from 2016 – problems that include slow economic growth, high legacy costs and expense growth outpacing tax-revenue growth. It said many states also are not making their full annual contribution to their pension funds, many of which have suffered from years of underfunding and poor investment performance.

“Measures of state credit strength have worsened since Conning’s last report in October of 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. “State revenue growth is falling short of the expenditure growth, and as a result, state budgets are under pressure.”

The report found that Utah, Florida, Washington, Nevada and Idaho were among highest in credit quality. Massachusetts ranked 13th, second-highest among the New England states, while Connecticut ranked 46th, which was the lowest. New Hampshire had the best showing in New England, coming in at No. 7.

Top-ranked states all have strong employment and personal income growth, as well as rising gross domestic product, population and home prices, according to the report. States with lower rankings tended to have issues with unemployment, high debt levels, persistent legacy costs, and steep tax revenue declines.

Lori Stabile is the PBN Web Editor. 

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