Fitch has boosted Woonsocket's financial outlook to stable and Moody's left it negative, but City Finance Director Thomas Bruce says both mark a turning point for the beleaguered municipality's finances — no lost ground on the credit rating.
The city's unchanged bond rating by Moody's, B3, is five steps below junk bond status, Bruce said. Fitch dialed it's analysis of Woonsocket's situation from negative to stable (its rating of the city is already a notch up from Moody's at B) on Wednesday. Fitch noted recent progress on the 5-year-plan, notably the General Assembly's approval of the $2.5 million supplemental tax, among reasons for optimism.
Moody's, typically more conservative in its analyses, Bruce said, left its assessment of the city's outlook at negative. Bruce noted the more pessimistic assessment focuses on the uncertainties remaining in the city's 5-year-plan. "The negative outlook reflects the challenges that the city faces in implementing substantial operating expenditure cuts while simultaneously raising revenues to eliminate the large accumulated deficit and obtain structural balance according to the newly adopted deficit reduction plan," Moody's writes in its report.
Pessimistic or not, Bruce said, the good news is neither rating agency notched the city's bond rating downward, a first for Woonsocket since 2010. "This week the free-fall stopped," Bruce said, due to progress on the 5-year-plan, including union negotiations and the supplemental tax approval.
Bruce said the greatest danger to the 5-year-plan is litigation. Already, the Woonsocket Call reports, a police retiree has challenged the Woonsocket Budget Commission's "enacted" changes to Local 404's contract under the US Constitution's Contract Clause.
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