The Baltimore riots have caused widespread and expensive damage, but the city is not expected to face any long-term credit impact from the unrest, analysts said.
The height of the riots came after the April 27 funeral of 25-year old Freddie Gray, who died a week after suffering spinal cord injuries while in police custody. Protests about the cause of Gray's death, which is still being investigated, and past police killings of black suspects turned violent leading to multiple fires of businesses along with looting. Official estimates of financial damages have not been released yet.
Jennifer Diercksen, the lead Baltimore analyst at Moody's Investors Service, said despite some short-term challenges Maryland's largest city is now facing because of the riots, long-term problems are not anticipated. Baltimore, which is rated Aa2 by Moody's and AA by Standard & Poor's, suffered drops in tourism the week of the riots with two conventions cancelled, but Diercksen said the city should weather the storm as long as there is no sustained loss in visitors or population.
"They definitely have some financial flexibility that should help out any unexpected costs," said Diercksen. "They have a satisfactory financial position with multiple years of operating surpluses."
Moody's analyst Julie Beglin said key riot-related costs the agency will track include police overtime and emergency management expenses as well as drops in sales tax revenues. The city was hurt economically in immediate aftermath of the April 27 riots with a 10 p.m. curfew enforced in the following days and two conventions cancelled. Major League Baseball's Baltimore Orioles played their April 29 home game at Camden Yards in an empty stadium and moved three scheduled home games from May 1-3 against the Tama Bay Rays to St. Petersburg, Fla.
"Near-term impacts from unrest do not impact credits," said Beglin.
Maryland State Treasurer Nancy Kopp said Baltimore Mayor Stephanie Rawlings has helped spearhead the city to its strongest credit rating in half a century in large part due to her focus on reducing the property tax burden and the city is well positioned to withstand any near-term revenue losses and security expenses. Maryland also has strong financial footing with triple-A ratings across the board.
"The events as reprehensible as they were are not going to impact the city's ability to meet its debt," said Kopp, who was first elected Maryland treasurer in 2002. "I don't think this is going to have any long-term adverse impact."
Ferguson, Mo. also faced massive protests last summer following a police shooting, but Moody's said in a report last December that the civil unrest "does not present a direct credit pressure." The ratings agency said it would monitor sales tax trends to see if there was any longer-term impact from the incidents that would impact the city's primary revenue source.
A comprehensive economic impact from the riots won't be determined until long after the unrest settles down. A 2004 study on the 1992 Los Angeles riots by the College of Holy Cross showed that over the next decade there was a cumulative loss of at least $3.8 billion in taxable sales throughout the nation's second largest city. However, Kopp is confident that if the upcoming Baltimore protests can be contained and important lessons are learned that the city can rebound due to many who want to see it thrive.
"If [the unrest] is contained it can lead to a stronger Baltimore," said Kopp. "The resilient spirit of the city can come through."
