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
17 comments:
Reality.
"Reality."
I don't know Todd, a reasonable alternative may be to outsource the entire city. Then, we'll know we are in real trouble when by phone we reach "Peggy" (reference to TV commercial).
From the article "Retirees, for instance, were asked to take cuts of up to 50% to their pensions.." Translated I assume to: the City by contractual arrangement will only pay 50% of what they had paid previously toward an employee's pension-- rather than retired employees (retirees) will have their pensions cut by 50%, yikes!
"Retirees, for instance, were asked to take cuts of up to 50% to their pensions." A retiree is someone who is retired, i.e, no longer employed. What the quoted sentence means in English is that people who are retired were asked to reduce their pensions by up to 50%. If what it really means is that the city will only contribute 50% of what was previously contributed to (current) employee's pensions, then it's some of the worst writing ever associated with the Associated Press.
"The Central Falls pension plan was expected to run out of assets by October without additional funding or significant concessions from both current employees and retirees, according to a June 17 report from Moody’s Investors Service."
http://www.bloomberg.com/news/2011-08-01/-dire-situation-forces-rhode-island-city-of-central-falls-into-bankruptcy.html
This is where Pacifica is headed and soon. There's no way we can outlast the seriously damaged CA economy for a return to more revenue
flow from state to city. Time is not on our side.
Coming from a finance major from one of the best schools in CA. I can see the filing of Bankruptcy for Pacifica
Anon @ 11:37 pm, what sort of process does that involve? The above article seems to imply it would in a way be good, contracts pension and benies would be court ordered to comply or reflect revenues. Is that the outcome to be expected?
What hasn't been mentioned here yet is the massive pension scandal in RI. Many had 2 or 3 pensions from different entities earned at the same time (served on a town council while working for the state) and thus collecting far more than normally allowed. Plus the pensions were far too generous - some 100% of regular pay, with some getting last-day promotions to bump it up further. So, a 50% cut may not be what it seems. Why would a union refuse to negociate when the result will be even worse, with no say at all? Just stupid...
So which is it: are we headed for certain bankruptcy very soon or are we going for a premium outlet mall in the quarry?
Anon1123, Since you asked so nice. It's not either/or and one isn't going to prevent the other. What the hell, go for broke!!
Oh Robert, that kind of thing isn't happening only in Rhode Island. Used to be the so-so wages in the public sector were offset by job security, great benefits and good pensions. Now the public sector also pays very competitive wages and still offers cushy pensions. Job security not so much anymore. Although, in Pacifica I'm not really sure any actual person has been laid off other than the city attorney. These people are shape-shifters. Heard that after all the noise and public hand-wringing and tears that only 1.5 jobs were cut. Does that include the attorney? Hard to be sympathetic or even believe we're on the right course. Wow, bet a lot of us private-sector types would like to work for Pacifica, Inc. For as long as there is a Pacifica, Inc, anyhow.
From the full article link "Central Falls, a city of 19,000 residents about a 15-minute drive north of Providence, has $80 million in unfunded pension and benefits obligations and $5 million deficits projected for each of the next five years."
$80,000 is a big pension liability. In Pacifica with 40,000 residents, the unfunded retired employee pension liability is something like $30,000-$35,000 I think. Regardless, if the person retired is you and that's your incoming monthly income (pension), cutting it in half would likely be disaster.
I remember reading that Scot Holmes, former Pacifica City Engineer, retired a few years back as a relatively young man with $100,000 annual income and health benefits for the rest of his life.
I didn't know Pacifica was running it's own Super Lotto.
"It's not either/or and one isn't going to prevent the other."
The logical possibilities are:
1. bankruptcy
2. premium outlet mall in the quarry
3. both bankruptcy and premium outlet mall in the quarry
4. neither one.
I'd bet on 4.
Scott "Cowboy" Holmes is now running the Big Wave Development in Princeton, Half Moon Bay.
Anon@2:28 I think you're on to something. Local history would suggest nothing of economic significance will be built, no outlet mall, no village in the quarry, not even that assisted-living facility back in the valley. They're all fun to blog about, pro and con and all, but who are we kidding? Go bankrupt? Why bother? We're used to municipal poverty and all that goes with it.
We're caught in a perfect storm of a unrelenting,lousy economy and a town with historically low expectations.
Scott Holmes for President.
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