Gov. Lincoln Chafee and other Rhode Island officials applauded this week's five-notch upgrade by Standard & Poor's on the general obligation debt of East Providence, R.I., to A from BB-plus.
The rating firm cited "significant improvements" in the 49,000 population city's financial stability, notably last month's dissolution of a state-imposed budget commission.
The commission is the second of three levels of intervention for financially troubled cities under a state law passed in 2010.
"Congratulations to the City of East Providence. All of the hard work and difficult decisions by the budget commission and city officials have been recognized by the national rating agency with this extraordinary upgrade," Chafee said in a
Standard & Poor's on Wednesday noted the commission's key role in adopting stronger fiscal management practices and obtaining balanced operating results.
"I am very grateful that the hard work paid off and has been recognized by Standard & Poor's," said state revenue director Rosemary Booth Gallogly.
The commission consisted of Michael O'Keefe, Diane Brennan, Steve Bannon, Council president and Mayor James Briden, and City Manager Peter Grazykowski.
The budget panel established a reserve fund and five-year plan, paid vendors, cut costs of departments, reworked union contracts and balanced the budget. East Providence also joined a shared-services committee with Central Falls and Pawtucket, under an executive order from Chafee.
While the city was under state intervention, Moody's adjusted its outlook to stable from negative while maintaining its Baa2 rating. S&P, before its latest move, had given the city a positive outlook while taking the city off credit watch.
"The higher rating is based on our recently released local GO criteria, as well as the city's improving financial performance and liquidity position and lower long-term pension liabilities," said S&P credit analyst Victor Medeiros.
The rating company said strong active state oversight will remain despite the commission's departure, although the panel's absence will test the city's ability to manage on its own over several years.
Also helping the city was approval from U.S. Attorney General Eric Holder to use $50 million that online search engine Google Inc. forfeited under a federal investigation into its distribution of ads for illegal prescription drug sales for pension obligation relief.
East Providence and North Providence each received funds because their officers assisted in the investigation.
