WOONSOCKET â€” Moodyâ€™s downgraded the cityâ€™s bond rating yesterday, dropping it by a full point, from Ba1 to Ba2, a move that could increase financing costs on the cityâ€™s $225 million in outstanding bonds and debt.
Moodyâ€™s sent Finance Director Thomas Bruce a letter explaining that change is related to past and ongoing school deficits. The company also noted the cityâ€™s improved financial management practices and willingness to increase revenues, even in a difficult economic environment.
Bruce said the city feared the downgrade might have been deeper and noted Moodyâ€™s did not place the city on watch status even with its negative outlook.
Mayor Leo T. Fontaine announced the downgrade during his comments to the City Council Tuesday night, and also pointed to the impact of the School Department's recently identified $2.7 million deficit for 2010-11.
"It is very distressing in many ways because a lot of progress that was made has certainly been undermined by this school deficit," said Fontaine.