Did Smiley Administration Mislead Voters and Rating Agency on Providence Finances
GoLocalProv News Team
Did Smiley Administration Mislead Voters and Rating Agency on Providence Finances
The press release claimed, “This rating upgrade resulted from an annual review of the City’s financial profile by the rating agency.“
How did the city score a rating upgrade? Just days later, the Smiley administration and the state’s Department of Education (RIDE) would openly blast one another over RIDE’s claim that the city owed the state upwards of $30 million for shortchanging Providence schools.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAnd, a week later the Smiley administration and RIDE lawyers would be before a Superior Court judge litigating whether the city of Providence owed tens of millions.
In less than three weeks, Smiley went from claiming the “stable and prosperous” to claiming the city now faces furloughs for city workers, deep program cuts, and a tax hike.
It appears that Fitch was not alerted. The potential financial liability is not mentioned in the Fitch rating report.
“…The specific dispute over funding was not formally discussed between Fitch and the City,” said Anthony Vega, press secretary to Smiley, in an email to GoLocal on Monday.
Further, the 10-page rating report issued by Fitch and dated October 29, 2024 makes no mention of the potential fiscal issue tied to the schools.
When GoLocal asked, “Didn't the city have a legal obligation to make the rating agency aware of the issue? The City was aware of the dispute for months if not much longer.”
Smiley’s office said they would get back to GoLocal.
GoLocal reached out to Fitch’s Arthur Tildesley III, Director Primary Rating Analyst on the City of Providence’s latest rating report and Fitch’s media contact Sandro Scenga about questions of the failure of the city to disclose the pending litigation with the state, but neither responded.
The Time Line of Events
October 29, 2024
Fitch Issues Rating Report on the City of Providence
November 1, 2024
Smiley Press Release on Fitch Upgrade
“We have worked diligently to balance our financial operations while making strategic investments in our city’s future. Our recent rating upgrades are a testament to our responsible fiscal management, positioning our city for long-term success and lower interest costs,” said Smiley. “We will continue to focus on making responsible investments that strengthen our financial position and benefit all Providence community members, ensuring a stable and prosperous future for our city.”
"Fitch’s rating upgrade reflects the City’s strong financial management and consistent improvement in finances and reserve levels. In its report, Fitch highlights that “reserve levels have improved from negative levels in fiscal 2016 to 5.3% of spending for fiscal year-end 2023,” a goal the City achieved ahead of its planned deficit reduction schedule through diligent financial practices. Additionally, Fitch notes that “the City’s recent negotiation of payment-in-lieu-of-tax agreements with various tax-exempt institutions within the city will support new revenue growth, helping to offset future increases in the operating budget.”
November 5, 2024
Election Day
Providence voters approved $400 million in bonds for school upgrades. Over the bond's life, Providence voters will pay approximately $1 billion in payments.
November 8, 2024
Court Battle
Providence Superior Court Judge Jeffrey Lanphear rules in favor of RIDE, declaring that the city is not paying its fair share to the school department.
“...the only issue is whether or not the city can pay its obligation to the state department. Otherwise, the state can freeze the money,” ruled Lanphear.
November 12, 2024
Smiley Threatens Cuts and Tax Hikes
Smiley announced that the city was facing drastic cuts to city services and potentially a tax increase.