Despite being surrounded by the two states ranked by Moody’s as having the worst debt service to state revenue ratios in the country, Rhode Island managed to come in 18th highest. Connecticut was worst, and Massachusetts just behind in second place. Is there a lot of work to be done in Rhode Island? Absolutely, but in New England, 18th worst is cause for celebration where debt is concerned.
Rhod Island certainly has its weak points. Woonsocket is much deeper in debt than the State’s Public Finance Management Board recommends. The Newport Daily News reports:
“At the state level, the debt of Rhode Island and its Quasi-Public agencies is generally affordable and within acceptable levels,” the report concluded. “The debt and pension liabilities of the State of Rhode Island are somewhat higher than national medians but have trended downward in recent decades, and are currently manageable.”
The debt facing Rhode Island’s 39 cities and towns, on the other hand, “vary greatly,” it said. “Even when pension, [Other Post Employment Benefits] and overlapping liabilities from local districts are included, some municipalities enjoy very low liability burdens. The liabilities in some other municipalities are very high.”
This is the second time the Management Board has taken a broad look at Rhode Island public sector debt and the first time the study has included pension and Other Post Employment Benefits (OPEB) in its calculations.
As it was in the earlier 2017 report, two municipalities — Providence and Woonsocket — exceeded the Board’s recommended 3% debt to assessed property value limit. Woonsocket’s debt was 7.3% of assessed value, down from 10% in the 2017 report. Providence’s debt was 3.7%, down from 4.4% in 2017.
Six exceeded the recommended 9.2% overall debt, pension and OPEB liability to assessed value limit: Woonsocket: 26.6%; Providence: 26.6%; Pawtucket: 25.6%; Johnston: 19.9%; West Warwick: 14.1% and Central Falls: 13.8%.
Read more here.
If you are considering relocation for retirement, you should take a good look at the debt load of any state you are considering. Is the state overindebted, making future tax hikes more likely? You want to avoid places that may end up costing you more in the long run.
E.J. Smith - Your Survival Guy
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