Rhode Island bonds will fund economic, infrastructure improvement

Rhode Island expects to come to market Tuesday with a $224.1 million competitive general obligation bond sale to back voter-approved economic and infrastructure improvements.

Seven bond measures totaling $400 million passed on March 2. They will benefit projects in transportation infrastructure, housing, educational building improvements and parks. State lawmakers postponed the vote from the traditional Election Day because of COVID-19 related delays in the state budget process.

Three bond rating agencies affirmed their ratings in advance of the sale. S&P Global Ratings and Fitch Ratings assigned AA ratings while Moody’s Investors Service rated state GOs an equivalent Aa2. All three assign stable outlooks.

“These ratings show that our quick action to stabilize the state's finances during the COVID-19 pandemic and our commitment to strong financial management are paying off," Rhode Island General Treasurer Seth Magaziner said.

Magaziner’s office has helped manage Rhode Island’s efforts to counter COVID-19 over the past year.

“We used the influence of our office to promote hazard pay for frontline workers, combat price gouging of COVID-19 therapies in the pharmaceutical industry, and help small businesses get the lifelines they needed to keep running,” Magaziner said in Rhode Island Treasury’s annual report.

State lawmakers are weighing Gov. Dan McKee’s $11.2 billion fiscal 2022 budget, essentially a placeholder. McKee took office in early March after Gina Raimondo resigned to become U.S. commerce secretary. It’s paralleled Raimondo’s call for no broad-based tax increases and a phaseout of the car tax, which former House Speaker Nicholas Mattiello had championed.

On Wednesday, former Providence City Council President Sabina Matos became the state’s 70th lieutenant governor and first person of color in that position. The state Senate approved McKee’s nomination of her.

John Igliozzi from the city’s Silver Lake neighborhood succeeded Matos as council president. He is a 23-year veteran of the council.

In a separate report, Moody’s said “deeply underfunded” pensions remain the primary budget challenge for capital city Providence, which it rates Baa1 with a stable outlook.

“Accommodating rising pension costs in its budget will heavily influence its future credit quality,” Moody’s said. “If Providence were to pull back on its contributions, its pension assets would risk depletion.”

For the fiscal year June 2020, Providence reported its Employees Retirement System had a reported funded ratio of 22%, which Moody’s calculated at less than 13% after its discount rate adjustments.