Bond Rating Boost — Moody's Removes Cranston's Negative Outlook

Moody's Investors Service has dropped the negative outlook hovering over Cranston's bond rating, citing the city's "improving financial position" and the recent deal brokered between the administration and retirees in the locally administered pension plan.

Cranston Mayor Allan W. Fung had hoped to get the negative outlook removed for some time and analysts from Moody's reportedly had been in contact with city officials over the past few weeks.

In the Monday announcement, Moody's affirmed the city's A2 bond rating and said the reduction in liabilities associated with the pension deal along with improving finances in general led to the removal of the negative outlook. The city is buoyed by its large tax base, the school department's near-completion of its deficit repayment plan and the city's newfound ability to fully fund its annual required contribution into the pension plan.

Moody's also took note of the increase in state aid for education thanks to the fair funding formula.

There are still challenges facing Cranston, however, and some of the issues relate to statewide problems, like unemployment, the potential for pension liabilities to increase and the possibility the tax base might decline instead of expand.

Moody's noted that Cranston has a higher than average pension liability, which makes it more vulnerable. And though Fung has managed to keep taxes level for two years in a row, Cranston is by no means a city with low taxes. That means there's a limit to how much more revenue the city can realistically expect to squeeze out of taxpayers who already feel overtaxed.

Fung, a candidate for Governor, will likely mention the positive news on Cranston's bond rating while out campaigning. And it's likely that the administration is hoping for another round of positive news soon from Fitch Ratings, which last gave Cranston a rating of A with a stable outlook.

Fung said the recent Moody's news is "fantastic" and said the city "worked together to get past some difficult problems.

"I'm proud of this significant accomplishment," Fung said. "Now, all three rating agencies have the city at an A rating and all the negative outlooks have been lifted."