Providence planning ‘ratings tour’ with Big 3 agencies

Mayor Elorza delivers his third budget address to the City Council.

PROVIDENCE, R.I. (WPRI) – Providence Mayor Jorge Elorza and his top aides are scheduled to meet with analysts from the world’s largest credit rating agencies – Moody’s Investors Service, Standard & Poor’s and Fitch – later this month with the hopes the firms might give a boost to the city’s financial outlook.

Finance Director Lawrence Mancini confirmed Thursday Providence will host Moody’s on July 25 and Fitch on July 26 to discuss city finances and give analysts a tour of the city. Elorza and other officials will travel to Boston to meet with Standard & Poor’s on July 24.

Mancini said the city’s “ratings tour” will include a presentation on Providence’s fiscal health and a proposal to borrow $45 million for infrastructure improvements that will likely be approved by the City Council on July 20. He said the tour of the city will focus on dozens of construction projects that are currently underway.

Heading into the meetings, the city’s credit rating from Moody’s is Baa1 with a negative outlook. Both S&P and Fitch have given the city a BBB rating. (Fitch upgraded the city last year after Elorza announced an operating surplus for the 2015-16 fiscal year.)

Mancini said he’s hopeful the city will see bumps – in either ratings or outlooks – from all the agencies this year, noting that Providence is again projecting a $10-million surplus that will finally erase a cumulative deficit that has been a cloud over City Hall for several years. He said the agencies tend to look at liquidity and “cities who reinvest in themselves” when considering credit ratings.

What is unclear is whether the state budget stalemate between the House of Representatives and the Senate will be a cause for concern for the three agencies. Elorza warned this week the city could be forced to resort to “massive layoffs” if state leaders can’t come to terms on a budget for the fiscal year that started July 1.

In the past, the agencies have also been critical of the city’s long-term liabilities for retiree pensions and health care, which hover around $2 billion in total. The city’s pension system was just 25% funded as of June 30, 2016, according to its annual audit.

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Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Facebook and Twitter: @danmcgowan