Rock Island’s credit rating fell for the second time in a year.
A new report from Moody’s Investors Service shows the City of Rock Island’s credit rating has been downgraded.
City leaders say they’re behind on funding police and fire pensions.
The mayor says it’s also a trickle down effect from the state, which is nearing junk status.
Rock Island Mayor Mike Thoms says the lower rating shouldn’t hurt them too much, yet.
He says the city’s budget is tight, and they do face challenges ahead.
But, they’re far from the junk status the state is facing.
“We’re not even close to where the state is,” said Thoms.
Thoms also says they’re far from a financial crisis.
“The interest rate can go up a little bit. It depends on how aggressive banks and the lenders want to be. Sometimes it’s a reality and sometimes it’s not. It depends on if they need the loans,” said Thoms.
Brian DeLaney of Consumer Credit of the Quad Cities says the credit rating simply helps banks decide who they want to work with.
“Is this going to be a risky loan? Should I even make the loan? Or should I go ahead and make the loan, and because you’re a good customer at a low risk give you the very best interest rate and terms,” said Consumer Credit of the Quad Cities CEO Brian DeLaney.
Fire and police pensions are impacting the city’s credit rating.
City leaders say they’re only being funding at 35 percent right now.
They aim to fund them at 100 percent by 2041.
Thoms says that’s exceeding a statute that requires 90 percent by that time.
He says they’re concerned about the credit rating, but city leaders are more worried about budget issues.
“We are financially strapped. We’re not broke. We’re not terrible, but there’s no doubt cash wise we’re struggling and we need to make some adjustments in our budget. Whether that means cuts or not, in certain areas, it may. We haven’t gotten to that point yet in the budget,” said Thoms.
He says the risk of missing another state budget deadline hasn’t raised any imminent issues yet, but like most municipalities, there’s potential for issues to come up.
“Nothing at this point. There are the capital improvement type funds, the highways, the streets, that sort of thing, that you get concerned that the state is co-sponsored with the city,” said Thoms.
Local credit experts say Rock Island is still at least five levels away from junk status.