S&P Upgrades Cranston's Bond Rating Outlook to Positive

Standard and Poor's has upgraded Cranston's bond rating outlook to positive from stable, citing "positive operating performance."

"We believe there is a possibility Cranston's budgetary flexibility could strengthen over the two-year outlook period due to its positive operating performance," the agency said in a statement. "We also believe Cranston's improved operational position is likely to translate into it maintaining stronger available reserves over time."

The rating applies to the city's long-term underlying A-rating on general obligation debt.

The upgrade comes on the heels of Moody's Investor Services' removal of its negative outlook on Cranston in March. That was based in part by the city's pension deal with municipal workers and retirees, which will shave tens of millions of costs over the next 30 years.

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.

With the revision, Cranston's rating with S&P is now A with a positive outlook.

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

"I'm proud of this significant accomplishment," Fung said.