Rhode Island Offering Bonds as Pension Overhaul Heads to CourtRomy Varghese
Rhode Island plans to sell $79.5 million in bonds this week after efforts to settle litigation over its pension overhaul failed less than two weeks ago.
Rhode Island is offering the general-obligation debt to retire older bonds and save $3.3 million, according to Standard & Poor’s. The ratings company ranks the securities AA, its third-highest level.
In 2011, the Ocean State passed “bellwether pension reform” that saved $400 million annually on the obligations, Moody’s Investors Service analysts led by Marcia Van Wagner said in an April 17 report.
State officials announced April 11 that talks to end the legal fight had failed, and the court will hear the case on Sept. 15, according to the report.
The impasse is a “credit negative” for the state and its governments, she said. “An unfavorable court decision will result in extremely difficult budgetary choices and considerable credit pressure,” Van Wagner wrote.
For cities and towns, which could save $178 million in pension contributions under the overhaul, being forced to absorb additional expenses would be a challenge, she said.
In a joint e-mailed statement, Joy Fox, spokeswoman for Rhode Island Treasurer Gina Raimondo, and Faye Zuckerman, spokeswoman for Governor Lincoln Chafee, said that “while we acknowledge Moody’s concern, Governor Chafee and General Treasurer Raimondo remain confident that the state has a strong case.”