WOONSOCKET â Citing continued erosion of the school departmentâs finances, Moodyâs Investor Service downgraded the cityâs bond rating from Ba2 to B2 Thursday, three notches deeper into junk territory.
Moodyâs said the city remains on watch for further downgrades. Meanwhile, Fitch Ratings, which already pegs the cityâs bond rating at a junk-level BB-, is scheduled to reevaluate the assessment next week and could follow Moodyâs lead, said Finance Director Thomas M. Bruce III.
âAlthough the city has taken a number of steps to stabilize and improve its fiscal position following a long-term trend of operating deficits, continued School Fund overspending resulting in a decade of annual operating deficits through 2012, as well as severely weakened liquidity, rising debt service and pension costs, reduced state aid and a stagnating regional economy are impeding the cityâs fiscal recovery,â Moodyâs said in a report released Thursday.
The report was based, in part, on the assumption that state lawmakers would okay a 13 percent supplemental tax bill, allowing the city to promptly gain access $3.2 million in short term notes to ease cash flow. Arguably, the cityâs financial position is actually weaker than Moodyâs assumed it would be because the House killed the cityâs supplemental tax plan hours before the report was released.