PROVIDENCE – Standard & Poor’s Ratings Services has improved its rating outlook on the City of Providence from stable to positive because of what it says is the city’s recently improved financial situation.
The service also affirmed its “A” rating on the city’s general obligation debt and “A-” ratings on the lease-revenue debt of the Providence Public Building Authority, the Providence Redevelopment Agency and the Rhode Island Health & Educational Building Corp.
“The ratings reflect the city’s position as Rhode Island’s economic driver; growing property tax base, led by strong downtown redevelopment activity; adequate financial operations with recently created new revenue streams; and improved management controls,” said the S&P research report released Aug. 15.
The report noted that there are some financial weaknesses, including the unfunded $653 million pension liability, the 40 percent funding ratio of the pension fund, and above-average debt burden.
Offsetting those negatives: “Improvement in the city’s finances and management’s continued efforts to achieve structural budget stability,” the report said.
S&P said Providence’s fiscal 2007 ending general fund was in good shape after four consecutive surpluses. The unreserved general fund was $22.2 million, or 5.6 percent of expenditures, at the end of fiscal 2007, above the city’s goal of 5 percent. “Management has demonstrated an ability to identify potential shortfalls at midyear and react successfully, which has contributed to the surpluses,” the report said. “In fiscal 2006, the city sold its Civic Center to the state; and management held roughly $16 million of the proceeds in a reserve outside the general fund at fiscal year-end 2008, providing additional flexibility.”
After accounting for 80 percent of state support on the city’s school debt, the report said, the City’s overall net debt burden is a moderate $2,300 per capita, or 4.6 percent of market value. If the large unfunded pension liability were included, the burden would more than double. Amortization is average with officials retiring about 54 percent of debt outstanding over the next 10 years.
Standard & Poor’s – a member of The McGraw-Hill Cos. – is a provider of financial research, credit ratings and risk analysis. Additional information, including S&P scores for Rhode Island and other bonds, is available at www.StandardAndPoors.com.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
