Pension Costs Cited in Johnston Bond Rating Downgrade [Update]

Moody's Investors Service announced Tuesday that it has downgraded Johnston's long-term bond rating from A2 to A3, because of the "underfunding of the town's local pension plans," among other factors.

In announcing the change, Moody's also noted the town's recovery from severe cuts in state aid — including a $4.8 million reduction in fiscal 2010 — and rebuilding of a surplus of about $7.2 million, according to the of Johnston's books.

Reached by phone at Town Hall this morning, Mayor Joseph Polisena said he's "very happy with the results, as strange as that may sound," because Johnston was spared a poorer result.

"After having done my homework and looking around [at recent results from other towns] in the state, we're doing better than a lot of other communities," explained Polisena, who noted Scituate's Aa2 rating and Warren's Aa3 as examples.

Polisena, who serves on a study commission created by the General Assembly to propose changes to town pensions, has previously estimated that Johnston has five to six years of funding left for local police and fire pensions.

The mayor has also stated that he will not propose additional taxes to fund the pension system, adding that he'd prefer to make reforms to the program to save it for the long term.

"I'm not going to create a pension tax, and as long as I'm here, there will be no town bailout for the pensions," Polisena said this morning. "Once we put our pension plan into effect, we're going to get our A2 back."

Editor's Note: This article was upated with quotes from Mayor Polisena at 10:53 am.