Standard & Poor's says improved outlook for Providence

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Standard & Poor’s: ‘Positive Outlook’ for Providence

Rating agency cites capital city’s “recently strong budgetary performance and improving general fund balance”

PROVIDENCE, RI
–Standard & Poor’s has improved Providence’s credit outlook from stable to positive, citing the capital city’s “recently strong budgetary performance and improving general fund balance.”

The rating agency pointed to Providence’s “good financial management practices” and “very strong liquidity, providing very strong cash to cover debt service and expenditures” as reasons for improving its outlook on the city’s 'BBB' rating.

“Providence is on the way back,” Mayor Angel Taveras said. “S&P’s positive outlook on our city’s general obligation debt is evidence that we have made significant progress in our efforts to restore long-term fiscal stability. We have taken control of Providence’s finances. The next administration must continue the fiscal discipline and responsibility my administration has brought to City Hall.”

Factors tempering S&P’s positive outlook in today’s financial report to investors include a still-challenging budgetary environment with little flexibility in the wake of Providence’s Category 5 fiscal hurricane.

Providence’s had a rating of ‘A outlook negative’ from S&P when Mayor Taveras took office in January 2011. The rating fell as low as ‘BBB outlook negative’ in June 2012 as the Taveras administration worked to pull Providence through a fiscal emergency that threatened the capital city with bankruptcy.

“In 2011, an independent municipal panel, initiated by the mayor, concluded Providence faced a $70 million structural deficit in fiscal 2011 and a $110 million structural deficit in fiscal 2012,” S&P wrote. “Immediately, the mayor's administration renegotiated employee contracts, closed five public schools, and cut discretionary spending across all city departments. The administration also raised property taxes and renegotiated payments-in-lieu-of-taxes agreements with city hospitals and higher education institutions.”