Moody's Affirms City's A2 Rating, Outlook Remains "Negative"

The city's underfunded police and fire pension plan continues to be a weight pulling down Cranston's bond ratings after Moody's Investors Service affirmed Cranston's A2 bond rating for $10.2 million in general obligation bonds today and continued to peg its outlook as "negative."

"The negative outlook reflects the weak funding status of the city's Police and Fire Pension Plan (15.5% funded as of July 1, 2012) and continued underfunding of the annual required contribution while the city continues to negotiate its Funding Improvement Plan with unions and retirees," Moody's said in a release.

The A2 rating reflects the city's "reduced financial flexibility" due to the school district's ongoing $8.2 milliond deficit reduction plan which will be eliminated by 2015, Moody's said.

"The rating also incorporates the city's sizable, primarily residential tax base characterized by an average socioeconomic profile and moderate debt burden," Moody's said.

It's not all bleak. Many cities similar in size and demographics are in much worse shape and looking at tax increases or ballooning pension problems of their own. Cranston is on the verge of seeing a deal between the fire and police unions and City Hall that will decrease benefit payouts and save the city millions over the next few decades.

That deal is still being worked on in court and there is no mention of it in Moody's report released Wednesday.

Moody's also cited the city's large tax base, moderate debt burden and the fact there is a deficit reduction plan in place as positive forces keeping the rating from falling.

And the city is expecting to make its full annual required contribution to the pension plan in the next fiscal year — something Moody's said could lead to a higher bond rating in the future.