Statement from Mayor Fung regarding Moody’s Report Upgrading Cranston’s Bond Rating
March 4, 2014 Cranston, R.I.- Mayor Allan Fung today shared details of Moody's
Rating Agency's decision to remove its "negative" outlook on Cranston's bond rating.
"This step by Moody's affirms that the efforts we have taken to tackle major issues
in Cranston have been successful." Primarily, the Mayor was referring to his recent
negotiated pension reform with Police and Firefighter retirees as well as those
active members who are still part of the City system. This agreement, not only
reduces the long term liability, but also saved the City over six million dollars in
this current budget year - and will continue to save tax dollars in the future."
Specifically, the Moody's report states, "The removal of the negative outlook
reflects an improving financial position and the recent reduction of unfunded
liabilities associated with the locally administered Police and Fire Pension Plan."
Mayor Fung responded by saying, "When I became Mayor, we made immediate efforts to
stabilize the operating budget which was saddled with large structural deficits. We
did that and also overcame significant reductions in State funding and a plummeting
economy at the time." He added, "I told the taxpayers of Cranston that immediate
success was not enough and that we needed to make long-term systemic changes so that
our achievements would not be undermined by massive future debt. And that's exactly
what we have done with our pension reform. We have corrected a problem that has
been left unchecked for decades."
The Moody's report also credits the City for having a growing fund balance (Rainy
Day Fund) and an adherence to the School's deficit reduction plan. Fung responded
by saying, "I have been committed to ensuring that Cranston is secure - and like any
fiscally sound organization or household - we have money to withstand emergencies.
Additionally, our City's Finance department worked cooperatively with the School
Finance department and the School administration so that we could continue to move
towards eliminating the School's deficit."
Additionally referenced in the report is the City's borrowing habits and associated
debt service of a "modest" 3.5% of operating expenditures in FY 2013. Mayor Fung
credits prudent choices in capital projects as well as the efforts of his Finance
Department under Finance Director Bob Strom who has ensured that the City pays low
interest rates and has refinanced our debt accordingly.
Mayor Fung said, "While I am elated over this news, we are not done. We must
continue in our efforts with the School department until that deficit is fully
recovered by the City, and we must always be vigilant about our day-to-day
Fung said, "This type of news from rating agencies not only helps us borrow money at
better rates, it also sends a message to companies - both large and small - that
Cranston is healthy and open for business thus promoting economic development."
The Mayor concluded by saying, "Monday's report from Moody's is particularly
encouraging for Cranston given the fact that we hear so often that Rhode Island is
struggling economically. Our efforts in Cranston, and Moody's acknowledgement of
those efforts, is evidence that we can keep our communities vibrant if we are
willing to make tough decisions every day to guard taxpayer's dollars and, at the
same time, roll up our sleeves and work with each other to negotiate agreements that
that recognize hard work while saving taxpayers millions of dollars each year."