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This Small State is Beating its Neighbors in a Debt Race. That’s Not Saying Much.

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Despite being surrounded by the two states ranked by Moody’s as having the worst debt service to state revenue ratios in the country, Rhode Island managed to come in 18th highest. Connecticut was worst, and Massachusetts just behind in second place. Is there a lot of work to be done in Rhode Island? Absolutely, but in New England, 18th worst is cause for celebration where debt is concerned.

Rhod Island certainly has its weak points. Woonsocket is much deeper in debt than the State’s Public Finance Management Board recommends. The Newport Daily News reports:

“At the state level, the debt of Rhode Island and its Quasi-Public agencies is generally affordable and within acceptable levels,” the report concluded. “The debt and pension liabilities of the State of Rhode Island are somewhat higher than national medians but have trended downward in recent decades, and are currently manageable.”

The debt facing Rhode Island’s 39 cities and towns, on the other hand, “vary greatly,” it said. “Even when pension, [Other Post Employment Benefits] and overlapping liabilities from local districts are included, some municipalities enjoy very low liability burdens. The liabilities in some other municipalities are very high.”

This is the second time the Management Board has taken a broad look at Rhode Island public sector debt and the first time the study has included pension and Other Post Employment Benefits (OPEB) in its calculations.

As it was in the earlier 2017 report, two municipalities — Providence and Woonsocket — exceeded the Board’s recommended 3% debt to assessed property value limit. Woonsocket’s debt was 7.3% of assessed value, down from 10% in the 2017 report. Providence’s debt was 3.7%, down from 4.4% in 2017.

Six exceeded the recommended 9.2% overall debt, pension and OPEB liability to assessed value limit: Woonsocket: 26.6%; Providence: 26.6%; Pawtucket: 25.6%; Johnston: 19.9%; West Warwick: 14.1% and Central Falls: 13.8%.

Read more here.

If you are considering relocation for retirement, you should take a good look at the debt load of any state you are considering. Is the state overindebted, making future tax hikes more likely? You want to avoid places that may end up costing you more in the long run.

Originally posted on Your Survival Guy. 

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.