CENTRAL FALLS, R.I. —
The Rhode Island-appointed receiver who filed for bankruptcy on behalf of Central Falls unveiled Thursday a five-year recovery plan to get the city back on sound financial footing through a combination of budget and pension cuts and tax increases.
Receiver Robert Flanders Jr. called the plan a “major step” but said most of the measures have been in place since he sought federal bankruptcy protection last month. He called Central Falls “a city that has been foundering, but is setting a new course.”
“The plan of recovery that we will be presenting to the court, and if approved by that court and if properly implemented, can achieve what many thought was not doable: mainly, returning the city to fiscal viability with a balanced budget sustainable into the forseeable future,” Flanders said.
In a court filing this week, Flanders described the plan as one that forces the city to live within its means and is sustainable over the long term. A 1.3-square-mile city of about 19,000 people north of Providence, Central Falls was facing an $80 million unfunded pension and benefits liability and a budget shortfall of more than $6 million at the start of the current fiscal year.
Flanders said his goal is to reach negotiated agreements with the city’s unions and retirees, amend the plan and submit a “consensual” proposal to the court for approval.
He said the aim is to bring back the city’s elected government “as soon as practically possible.” Local officials were demoted to advisory status, and the mayor was stripped of his keys to City Hall. Flanders stressed that he wants to ensure “we don’t fall back into the same sinkhole.”
“There are no guarantees in this business,” he said. “We can only light the way forward.”
Once the city is out of bankruptcy, it could still be subject to some type of outside oversight, including a budget control board or a fiscal overseer. Both are provided for in the legislation passed by the General Assembly that paved the way for Central Falls’ bankruptcy filing.
Flanders took that step, on behalf of the city, on Aug. 1, saying that was the only way to return the city to solvency because taxes had already been hiked and city services slashed.
In his effort to fix the city’s fiscal problems, Flanders closed the community center and library, cut retired city workers’ pensions by at least half, voided some contracts and imposed some layoffs, though he said he had been able to minimize them. He is still in talks with unions and retirees over their pay and benefits and said that much progress has been made. He said the pension and benefit cuts he has put in place are designed to be “as fair as possible” and to “protect the most vulnerable.”
The five-year “plan of debt adjustment,” under which the city has a balanced budget each year, also calls for property tax hikes. Under the proposal, property taxes would increase by 4.25 percent in the current fiscal year followed by 4 percent a year in the coming four years.
Central Falls Councilman James Diossa was the only member of the city’s elected government to appear with Flanders and Chafee while they answered questions from the media. Diossa said the property tax hike would hurt a lot of residents, but that he needed to study the plan’s other aspects before weighing in.
Flanders’ plan would also merge the city’s police and fire chiefs into a single public safety position.
Bond holders will be paid in full under a new state law that puts them at the front of the line of creditors in a bankruptcy proceeding.
Officials say Central Falls was hard hit by a loss in state aid and expected collections from the Wyatt Detention Facility that did not materialize. Flanders’ predecessor as state-appointed receiver, Mark A. Pfeiffer, also cited a “culture of government” that allowed the fiscal crisis to worsen.
Flanders has said he wants to avoid a protracted and costly bankruptcy proceeding and that the city could be out of bankruptcy before the end of the year if the unions, retirees and his office agree on a plan – and the court signs off on it.
The next status conference in the case, before Judge Frank Bailey, is set for Friday in Providence.
State Sen. Elizabeth Crowley, who represents Central Falls and has lived there her whole life, fought the idea of having the city merge with a surrounding community as a way to save money. Flanders said Thursday that if his plan is approved, Central Falls would be able to remain independent.
Crowley likened the recovery plan to being told by one’s mother to take a bitter medicine – one that, ultimately, helps make you feel better.
“I see a light at the end of a dark tunnel,” she said.
At least one resident agreed, saying she looks forward to return of the City Council and the mayor.
“It’s most important that we haven’t been represented over the past year. We have a receiver who has ultimate power. As elected officials, they have no power either. They’re just in a consultant advisory role. At this point, we see the light at the end of the tunnel. It will be good for us to have accountability again,” said Mia Ristaino-Siegel, a resident of Central Falls.
The public will be able to offer comment on the recovery plan next Thursday evening at Central Falls High School.