CENTRAL FALLS â€“ As an endorsement of the steps toward fiscal solvency taken by state receivers and the cityâ€™s plan to emerge from bankruptcy, the Standard & Poorâ€™s rating agency has upgrade Central Fallsâ€™ bond rating to BB with a â€śstableâ€ť outlook.
The city had previously had a C rating with a â€śdevelopingâ€ť outlook. On the day after the city officially emerged from bankruptcy last month, Moodyâ€™s Investors Service upgraded the cityâ€™s bond ratings from Caa1 to B2 and changed its outlook to â€śpositive.â€ť
In a report thick with financial jargon dated Nov. 15, Standard & Poorâ€™s said, â€śwe believe the active state oversight and a requirement for city management to file quarterly and annual attestations to the state partially mitigates concern over the city's future willingness to pay debt service. In our view, post-bankruptcy there remain strong controls and fiscal oversight. There will be quarterly and annual attestations filed by local officials attesting that the city remains in conformity with the adopted plan. We believe these controls enable management to make timely budget adjustments if financial performance deviates from projections.â€ť
The report also credited the General Assemblyâ€™s 2011 vote to pass a law giving bondholders the lien on the cityâ€™s tax receipts.
"The difficult decisions that have been made and the hard work of everyone involved are paying off, as we are now seeing with positive indications such as the Moody's upgrade last month and this S&P upgrade," Gov. Lincoln Chafee said in a written statement on Friday. "There is a brighter future ahead for Central Falls."
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 Standard & Poor's Rating Services upgrade.
Revenue Director Rosemary Booth Gallogly, who quarterbacked the cityâ€™s receivership and bankruptcy, said that the upgrade and positive outlook bodes well not just for Central Falls but for the State and all RI municipalities. "We are pleased that Standard & Poor's Rating Services has recognized the efforts of the State and the City in developing a stable fiscal framework for Central Falls,â€ť Booth Gallogly said. â€śOver 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 were critical to this rating change as was the successful emergence from bankruptcy."