Rating Agency Also Assigns a Positive Outlook as the City exits Bankruptcy
Providence, RI - Governor Lincoln D. Chafee today announced that Moody's Investors Service has upgraded the long-term bond credit rating of the City of Central Falls to B2 with a positive outlook. This is a marked improvement from the previous rating of Caa1 with a negative outlook.
According to the Moody's Report, the State's oversight has been key to the City's improving credit position and the new rating reflects "the City's emergence from Chapter 9 bankruptcy and strong indications of continued financial improvements. While the City still faces budgetary pressure with weak revenue growth, Moody's expectation is that the City budget will remain balanced and in line with its six-year plan."
"This has not been a painless process, but the difficult decisions and hard work of everyone involved are now paying off as Central Falls emerges stronger," Governor Chafee said today. "Our handling of the Central Falls bankruptcy presents a national model to other municipalities in dire financial straits. I want to take this opportunity to thank Rosemary Booth Gallogly, Director of Revenue, the Receiver's office and the entire Central Falls team for their collaborative efforts in this regard, and the people of Central Falls for their sacrifices to rebuild their community."
According to the Governor and City Officials, staffing and city service reductions along with changes to the City's pension benefits and tax increases were necessary for the long-term financial health of the City. Balancing the budget quickly and implementing the six-year financial plan along with the successful emergence from bankruptcy were the key drivers in Moody's upgrade.
Moody's cites balanced budgets, managing finances according to the plan, continuing to fully fund pension payments, and the fact that the City never missed a debt service payment as reasons for the positive outlook.
Director of Revenue Rosemary Booth Gallogly said that the upgrade and positive outlook bodes well not just for Central Falls but for the State and all RI municipalities. She added, "We are pleased that Moody's has recognized the efforts of the State and the City in developing a stable fiscal framework for Central Falls. Over the next few months, the State and the City will work together on the transition to local control of city government. The implementation of the six-year financial plan and the balancing of the budget was critical to this rating change as was the successful emergence from bankruptcy."