New trouble for Woonsocket as Moody’s joins Fitch in warning
January 6th, 2012 at 11:53 am by Ted Nesi under Nesi's Notes, On the Main Site
The hits just keep on coming for Rhode Island’s struggling cities and towns.
Moody’s Investors Service said Thursday it has begun a review of Woonsocket’s credit rating – already at junk status – and warned of the potential it may be downgraded again. The announcement comes less than a month after Fitch Ratings, which rates Woonsocket one notch above junk, put a negative outlook on the city.
Woonsocket Mayor Leo Fontaine told WPRI 12 last month his city’s financial circumstances are “very tenuous.”
“The state continues to watch the situation in Woonsocket closely,” Christine Hunsinger, a spokeswoman for Governor Chafee, told WPRI.com on Friday.
The announcement from Moody’s came the same day Governor Chafee convened a summit of municipal leaders to discuss what he termed the “crisis” facing Rhode Island’s cities and towns. Moody’s said the review was a response to the news that the Woonsocket schools finished the 2010-11 fiscal year with an unexpected deficit.
“While the city has undertaken meaningful steps to eliminate its accumulated deficit and stabilize its financial position … continued deficits in school operations has put Woonsocket’s finances under considerable pressure,” Moody’s said. “In addition, the city continues to underfund its local pension plan.”
The rating agency said its review will examine Woonsocket’s 2010-11 audit and evaluate “the city’s financial and liquidity position, its deficit reduction strategy, and possible intervention by the state.” Central Falls and East Providence are the only two cities whose finances are currently under formal state oversight.
Moody’s warned last month more municipalities are likely to see their credit ratings downgraded, particularly those with one of the 36 locally run pension plans that were left out of last year’s law. Many of them are deeply underfunded, including Woonsocket’s.
Tags: fitch ratings, moody's, municipal, woonsocket
Nesi's Notes covers politics and the economy in and around Rhode Island for WPRI.com. (Twitter: 
What did you expect? This rating agencies are not as gentle as Rhode Islanders with the enabling. They will hold cities and town accountable, which means elected officals, who you people keep re-electing the same type dirtbags. I don’t want to hear anymore Rhode Island excuses, such as. “they didn’t know better, they will do better, they were helping poor people.” Helping poor people while nice in philosphy creates resentment and kills motivation and incentive. You people brought this on yourselves not fix it.
The state has been dumping money into the Central Falls landfill for 20 years with the only result being low taxes for the 3rd worlders who live there.
Soon they will begin shifting state school aid to the sanctuary cities – taking from the taxpayers.
Recently the state just dumped $2 million or so that they don’t have into East Providence and it’s clear that they are the tip of the iceberg.
When will these money grabs stop?
Jim
You are correct! I’ve had a problem with the school funding formula since it was implemented. Nowhere in the formula were insane management practices of a community to be examined before school funding money was handed out.
With a limited bucket of school funds, as the number of distressed communities rises, communities who once believed they would get some crumbs are now in the cross hairs (East G, Barrington, S Kingston to name a few).