Westerly bond rating upgraded as finances improve; hospital, education center cited

Westerly bond rating upgraded as finances improve; hospital, education center cited

The Westerly Sun

WESTERLY — One of three major bond rating agencies recently gave the town its second highest rating and called the town’s financial outlook “stable.”

The ratings house, S&P Global ratings, assigned the town an AA rating earlier this month as part of an assessment conducted on the town’s successful effort to refinance bonds that were originally issued in 2007. The rating from S&P represents a reaffirmation of the same grade it gave the town in 2014.

Town Manager Derrik M. Kennedy said the rating could be a sign the town has regained a position of stability after Moody’s rating service made a slight downgrade to the town’s rating from AA3 to AA2. The current Moody’s rating and the one S&P reaffirmed are both within the “high quality” zone for both agencies.

“This is great news for the town,” Kennedy said. “I give full credit to the Town Council who worked really hard and understood what needed to be done with the budget to get us to this rating. Kudos to them.”

Deliberations on the current budget and the 2017-18 budget, which goes into effect on July 1, focused on the need for restricting spending to ensure the bond rating did not continue to decline. The ratings are seen as measures of the town’s ability to repay loans and effect interest rates for borrowing. Higher ratings are linked to lower interest rates.

To further bolster the town’s fiscal picture, Kennedy has asked the council to consider adopting policies regarding use and size of the budget surplus, also called the undesignated fund balance, debt management and cash management. Kennedy also plans to propose a health insurance reserve fund policy.

S&P said the town has a “very strong economy” and referred to “strong management” and good financial policies as determined by the company’s assessment methodology. The agency also found the town has “very strong liquidity.” The agency said the town has exhibited “adequate budgetary performance and flexibility.”

“Over the next couple months, the Town Council will have a chance to review and adopt debt management, fund balance, and cash management policies,” Kennedy said. “If adopted, these policies will put the town on an even stronger financial footing.”

A report from S&P cited Kennedy’s and the council’s commitment to stop an earlier practice of using the fund balance to balance the budget as evidence of strong management. The report also noted the council receives monthly financial reports and acknowledged the town’s rolling five-year capital improvement plan.

The report by the agency noted the presence of the new Westerly Education Center and its partnership with Electric Boat as a positive part of the local economy. Likewise, the report pointed to Westerly Hospital’s affiliation with the Yale Health network as a positive development.



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