Chafee, Gallogly comment on East Providence's rating upgrade
PROVIDENCE — Two of the people most responsible for the state take-over of East Providence nearly two years ago — Gov. Lincoln Chafee and Director of Revenue Rosemary Booth Gallogly — offered up their take on the recent upgrade of the city's bond rating by the firm Standard and Poor's.
S & P noted a number of significant improvements in the financial health and stability of East Providence while raising ts unenhanced rating (SPUR) on the city's general obligation (GO) debt from BB+ to A. The outlook for the city has been deemed "stable"
"Congratulations to the City of East Providence. All of the hard work and difficult decisions by the Budget Commission and City officials have been recognized by the national rating agency with this extraordinary upgrade," Governor Chafee said. "This is another example of the good work that has been done with the help and support of the State under the Fiscal Stability Act. Rhode Island has an important role to make sure that all of our communities are financially strong and vibrant."
In making the upgrade, Standard and Poor's noted the key role of the East Providence Budget Commission for adopting stronger fiscal management practices and obtaining balanced operating results. The Budget Commission was dissolved last month based on the State's determination that the fiscal health of the City had improved to a level that oversight of a Commission was no longer needed.
"The stable outlook reflects the city's focus on rebuilding its operating flexibility and its enhanced financial management controls,"said Standard & Poor's credit analyst Victor Medeiros. "We believe East Providence's improved budgetary outlook is likely to translate into stronger available reserves, particularly as the economy rebounds and new development projects gain traction."
Added Gov. Chafee, "This marked progress would not have been achieved if not for the partnership between the City and the Commission. Rhode Island is grateful to the Commission members (Michael O'Keefe, Diane Brennan, Steve Bannon, Council President and Mayor James Briden, and City Manager Peter Grazykowski), City staff, and Director Gallogly and Department of Revenue staff for all their dedication and determination to ensure a successful outcome."
Considered among the key elements in the city's improved outlook, an impressive five-notch upgrade, were the elimination of East Providence's debt to vendors, its improved pension funding plan, consolidation in personnel and other overhead elements, the five-year budgetary framework created by the Commission and $8-lus million surplus achieved during the last fiscal year.
Said Director Gallogly, "I am thankful to everyone participating in the efforts that made this upgrade a reality for the City of East Providence and its residents. I am very grateful that the hard work paid off and has been recognized by Standard and Poor's."
The immediate benefits to the city from the upgrade include increased access to markets, meaning more investors will be inclined to by bonds issued to East Providence and banks will be more willing to lend. It also should allow the city to borrow money at lower interest rates when it has to seek funds, which means paying less debt service on Tax Anticipatory Notes (TANs) and other bonds.
With the release of S&P's upgrade, it is expected the two other most quoted ratings agencies, Moody's and Fitch, will follow with similarly improved opinions about the city's financial footing and future.