COLUMN: IN OUR OPINION

The City Hall rally to promote Gov. Deval L. Patrick's Municipal Partnership Act got top billing on page one yesterday, but ominous warnings from Wall Street reported in a story that ran below the fold could have as great an impact on the city's fiscal future as

In reviews of Worcester's finances before a recent sale of municipal bonds, Fitch Ratings, Moody's Investor Services and Standard & Poor's made no change in Worcester's credit ratings. However, all three reiterated warnings that the ratings could be lowered if the reserves are not restored to a prudent level.

They also indicated the root of the problem: The growth in "fixed costs," notably health-insurance benefits, far outpaces revenue growth. They singled out for approval City Manager Michael V. O'Brien's proposal to shift health coverage for more than 360 city retirees who have conventional insurance plans to Medicare. That would yield major annual savings because a significant part of the cost of coverage would shift to the federal program.

The change is both reasonable and fair. About 2,200 of roughly 2,700 Worcester retirees already have Medicare plans. Moreover, Chapter 32B, Section 18, the local-option state law authorizing the shift, requires that the Medicare coverage must be "of comparable actuarial value" to their conventional insurance plans.

When Wall Street talks about lowering bond ratings, prudent communities listen. Dropping Worcester's favorable rating to below investment grade would not prevent the city from securing loans, but it would mean the city would pay a huge penalty in higher interest rates. Even on relatively small bond issues, the difference could be hundreds of thousands of dollars and, in major bond issues, millions.

In the current economic climate, the city can ill-afford to continue wasteful perks and policies of the past.