R.I. Superior Court Justice Michael A. Silverstein put Central Falls into receivership at a hearing on Wednesday and named Jonathan N. Savage, a partner at Shechtman Halperin Savage LLP in Pawtucket, the city’s temporary receiver.
Putting the city into receivership is “in the best interest of [Central Falls’] taxpayers, employees, creditors, vendors and pensioners,” Silverstein wrote in his order. A permanent receiver will be appointed by June 8.
Central Falls Mayor Charles D. Moreau and the city council filed for receivership earlier in the day, citing falling tax revenue, a reduction in state aid and “collective bargaining agreements and pension obligations [the city] cannot afford” as reasons for its fiscal crisis.
Attorneys said the city has just $4 million in assets on hand to cover more than $35 million in pension benefits it has promised municipal employees. Actuaries said the city should set aside $2.7 million this fiscal year to cover pension obligations, but no contribution was made due to a lack of funds.
The city also owes more than $10 million on outstanding municipal bonds.
City officials said they were forced to act because they need to balance the municipal budget before sending tax bills in June. Councilman James Diossa was the only member of the five-person council to vote against filing for receivership.
While no one really wants to file bankruptcy or some version there of, it’s the mature thing to do when you realize you're broke. And when you’re broke you’re broke, end of story. I want to congratulate city leaders for making the tough decision and taking the correct course of action. Any other path would have exacerbated the problem for future budgets.
Bankruptcy or this version is nothing more than a financial tool to deal with the issue at hand. It’s the only affective method to revolve intense financial issues with no viable resolution insight.
It’s a sad occurrence, and a wide variety of people will be impacted negatively, but it has to happen, and hopefully they will take advantage of the situation while in receivership and reset everything financially so it’s in the best interest of their citizens and their community.
Interestingly enough, the city’s website is titled: “A City With a Bright Future”. Let’s hope their receivership approach will allow them to rekindle that bright future.
Their website also states:
“Never Doubt that a small group of thoughtful citizens can change the World." (Margaret Meade).Let’s also hope their actions can motivate other city leaders around the nation to do the right thing to help change the world we all live in for the best in the long run, by filing bankruptcy or some version of it."
Absolutely, Central Falls, RI and its leaders, for making the very tough but correct decision, deserve a “Standing ovation.”
Hope all is well.
J.D. Rosendahl, Rosey