Rhode Island Has Two of the Nation’s ‘Junkiest’ Cities

Rhode Island Has Two of the Nation’s ‘Junkiest’ Cities

Two Rhode Island cities have the unhappy distinction of being among seven in the entire country whose bond rating has been downgraded to junk status.

A CNNMoney report has singled out Woonsocket and Central Falls as among the financially worst off cities in the country. The other five cities are: Harrisburg, Pennsylvania; Detroit and Pontiac in Michigan; Harvey, Illinois; and Littlefield, Texas.

The report, issued earlier this week, described cities that were drowning in a perfect storm of economic factors: high unemployment, cash-strapped residents who can’t afford to pay property taxes, rising operating expenses, and burdensome pension and debt obligations.

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Central Falls recently declared that it was broke, petitioning the courts to appoint a receiver to handle city finances. Standard and Poor has rated the debt issued by the city to be a junk level, which means it is below investment grade. Woonsocket, meanwhile, has also had its bond rating classified at junk level by Moody’s Investor Services.

One municipal government expert has compared the situation to the budget crisis in Greece and Spain. “America's short-term budget crises, long-term growth perspectives and needs for austerity are similar,” Matt Fabian, managing director at Concord, Mass.-based consulting firm Municipal Market Advisors told CNNMoney.