‘Dire’ fiscal state forces rhode island city into bankruptcy

CENTRAL FALLS, RI – According to Bloomberg, the town of Central Falls, Rhode Island (pop. 18,716) has sought Chapter 9 bankruptcy protection. The city was unable to get concessions from municipal employees and is requesting that the court void all union contracts.

Robert Flanders, a former state supreme court justice, has been named to oversee the city’s finances. “The city’s financial condition has deteriorated to the point where it is insolvent,” Flanders said in the court filing. “The overwhelming pension obligations and the slowing economy, among other factors, have significantly decreased revenues while the city’s operational costs have increased.”

Central Falls has a structural deficit of about $5 million on an annual budget of about $16.4 million, according to court papers. The city’s financial difficulties “are much bigger” than the cost of labor and benefits, says Marc Gursky, a lawyer for the firefighters union. The city should be negotiating with workers, bondholders and the state to come up with a solution, he said.

“Firefighters or police or a handful of workers at City Hall aren’t going to be able to solve the city’s problems,” Gursky said.