Moody's Upgrades East Providence's Bond Rating to A-Status

If you’re looking for an example of how to carry out a municipal financial turnaround, look no further than East Providence.

Moody’s Investor Service on Tuesday announced that it has upgraded the city’s general obligation bond rating affecting some $17 million in outstanding debt from Baa1 to A2 citing “the city’s continued trend of financial improvement over the last three fiscal years.”

The city’s outlook is listed as “stable,” according to Moody’s, and the positive ratings news means the city can take advantage of lower interests rates to cut down on its annual debt service.

“Through hard work and financial discipline from the elected officials, City management and City employees, the City has elevated itself from junk bond status to the elite tier of A-ranked municipalities. This is what the taxpayers of East Providence deserve,” said City Manager Paul Lemont.

The ratings upgrade comes on the heels of a “very positive 2014 financial audit,” according to a city news release, and residents saw no tax increase in 2015.

Moody’s was particularly pleased with the city’s recent budget surpluses and building up of capital reserves.

“Further, the rating reflects the reduction of the city’s unfunded liability in its self-administered pension plan as a result of improved funding practices and the infusion of assets from a legal settlement,” according to a Moody’s summary of the ratings upgrade. “In addition, the A2 rating incorporates East Providence’s sizeable tax base with average wealth levels and a manageable direct debt burden.”

East Providence has been able to fully fund its annual required contribution, or ARC, for both pensions and other post-employment benefits, or OPEB.

““On behalf of the City Council, I would like to express my great pleasure at this recognition by Moody’s of the remarkable financial turnaround which the City has undergone,” said Mayor Thomas Rose. “This is a testimony to the dedication of my fellow City Council members and the City employees to careful fiscal management that keeps the needs of the residents’ first and foremost.”