Moody's Investors Service said it has downgraded to A3 from A2 the town of Johnston, R.I.'s long-term rating, affecting $24.5 million of currently outstanding general obligation debt.
The downgrade to A3 reflects continued underfunding of the town's local pension plans and an improving operating fund balance position after experiencing budgetary pressures due in part to recent state funding reductions.
The rating also incorporates the town's moderately-sized tax base with average wealth levels and a manageable debt position.
The negative outlook is based on Moody's expectation that the town will remain challenged to obtain structurally balanced operations while simultaneously making progress toward increased funding of the police and fire pension actuarially required contributions (ARC) in an environment of continued revenue weakness and ongoing expenditure demands.
