PROVIDENCE, R.I. (AP) — Financial rating agency Moody's Investors Service is predicting a tough year for Rhode Island's cities and towns as the economic downturn continues to wallop the state.
Moody's Investors Service said in a report Monday that the state's municipal governments are experiencing economic weakness, revenue stagnation and pension expense growth that are more acute than the problems facing most other states. It said it expects "a continuing trend of downgrade activity" in 2012.
The report warned that Rhode Island faces a "higher probability" of a double-dip recession as its economic recovery lags behind the rest of the nation.
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Rhode Island's unemployment rate for November was 10.5 percent, up from 10.4 percent in October. The state lost 1,900 positions in November. The national unemployment rate is 8.6 percent.
Moody's has downgraded nine Rhode Island cities and towns in 2011, including Providence, East Providence and Pawtucket.
"We expect a continuing trend of downgrade activity in 2012 with few, if any, rating upgrades," said Moody's Analyst Vito Galluccio, the author of the report.
The state's municipalities face cuts in state funding while struggling with their own shrinking revenues, the report said.
The report does credit state leaders with stepping in to aid struggling cities including Central Falls and East Providence, but warns that those efforts could be overwhelmed if other municipalities seek additional help.
One struggling Rhode Island municipality received some good news Monday: Pawtucket saw Fitch Ratings raise its rating outlook upward from negative to stable. Fitch downgraded the city a year ago, but on Monday raised it again, citing successful efforts to close a budget deficit.
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