By Erika Niedowski, Associated Press
CENTRAL FALLS, R.I. — The state-appointed receiver overseeing the cash-strapped Rhode Island town of Central Falls has filed for bankruptcy on the city's behalf in an effort to help it get back on its feet.
Receiver Robert Flanders and Rhode Island Gov. Lincoln Chafee announced the step — which Flanders has described as a last resort — at a news conference at City Hall. Flanders filed the legal paperwork seeking bankruptcy protection Monday.
"From the ashes of bankruptcy Central Falls will rise again," Flanders said.
Flanders had earlier indicated that seeking Chapter 9 bankruptcy protection in federal court might be the only option unless municipal retirees and city workers made major voluntary concessions. Retirees, for instance, were asked to take cuts of up to 50% to their pensions, a move they did not accept ahead of last Thursday's deadline, set by Flanders.
With the city now seeking bankruptcy protection, Flanders said he plans to reduce pension benefits beginning in late August. He has asked the federal court to immediately reject collective bargaining agreements. He said the next set of pension payments will reflect at least the cuts he outlined to city retirees.
In addition, he said city workers will face layoffs.
Flanders called the step unavoidable, as taxes have already been raised and city services have been cut "to the bone."
Bankruptcy will allow Central Falls to "reinvent itself as a viable community," Flanders said.
Chafee said the move is a "difficult" decision but that it's needed in light of Central Falls' "dire" financial outlook.
Posted by Steve Sinai