Central Falls & Pawtucket Merger: How Would It Affect RI?
Friday, December 17, 2010
A proposed merger between the financially beleaguered city of Central Falls and Pawtucket could have ramifications throughout Rhode Island if all of the recommendations of the state-appointed receiver for the state’s tiniest city are adopted.
But by far the biggest impact would be felt director by the city of Pawtucket—itself facing a major $12.9 million budget deficit in the upcoming year.
‘Let’s give the problem to Pawtucket’
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTPawtucket Mayor-elect Don Grebien yesterday expressed skepticism over the idea. “Central Falls is the worst financially positioned city in the state. Pawtucket is the third,” Grebien said in an interview. “It’s ironic they want to marry the first and the third.”
Grebien told GoLocalProv he was open to consolidating some services—such as animal control and vehicle maintenance—between the two cities. But he said he did not want to take on Central Falls’ debt, saying Pawtucket has its own financial problems to deal with. “We’re not going to take on their debt,” Grebien said. “It’s like, ‘Hey, we have a problem, let’s give the problem to Pawtucket.’”
In his report, Central Falls Receiver Mark Pfeiffer, who is a retired Superior Court judge, suggested that Pawtucket could actually benefit from such an arrangement. He noted that the city’s population would increase by 26 percent to 91,886—edging out Warwick to become the state’s second largest city.
“The size of the resulting city may open up new revenue streams for Pawtucket due to greater influence in State government and because its larger size and socio-economic indicators may be more attractive to grant makers,” Pfeiffer wrote.
But Grebien questioned whether those benefits would outweigh the burden to Pawtucket. “While that may sound wonderful and may give us some benefit, I don’t know what that benefit is,” he said. “What good is it if we have our highest debt ratio and can’t pay our bills?”
Warwick Mayor Scott Avedisian also remained skeptical yesterday about the benefits of annexation. While he was not concerned about his city losing its status as the second largest, he said he was worried about the impact on Pawtucket—where he has been advising Grebien in his transition process.
“I’m more concerned with does that hurt Pawtucket,” Avedisian told GoLocalProv. “I just hope that doesn’t further burden a community that is experiencing its own difficulties.”
Impact to the rest of Rhode Island
Beyond the immediate issues raised by the Central Falls-Pawtucket merger, Pfeiffer recommended a whole slew of sweeping changes to local pensions, union contracts, and hiring practices—saying other communities were faced with similar challenges. “Other municipalities have similar problems, but, unlike Central Falls, they have not yet ‘run out of money,’ making the problem less apparent and/or public,” Pfeiffer wrote.
His recommended reforms would have a significant and long-lasting impact on cities and towns throughout the state, fundamentally altering long-standing law and practice.
Avedisian told GoLocalProv he thought many of the proposed reforms would not be feasible in the short term. “That’s going to require huge amounts of legislation to get passed through the General Assembly,” Avedisian said. “In the short term, I don’t think any of that could happen.”
But Avedisian, who has known Pfeiffer since the days they worked as Republican staffers at the General Assembly, said the recommendations—while not immediately feasible—should still be taken seriously. “He would offer thoughtful insights into what would happen,” he said. “He’s not just going to throw out recommendations for grandstanding.”
Senate President M. Teresa Paiva Weed said in a statement she was open to using Central Falls as an opportunity to pass statewide reforms—particularly in pensions.
“Judge Pfeiffer’s report highlights the alarming fiscal concerns for the City of Central Falls,” Paiva Weed said. “However, Central Falls is only one of several communities facing significant fiscal challenges. This is an opportunity to find and craft long term solutions for cities and towns, particularly as they pertain to underfunded municipal pension programs.”
“The Senate agrees that there is a need for swift but prudent action by the State, and will work with Governor-elect Chafee through the budget process to craft solutions that address our municipalities’ fiscal challenges,” she added.
House Speaker Gordon Fox said he couldn’t commit to how the House would respond, but said the many issues raised in the report would be “fully vetted in public hearings.” (Click here to read his full statement and what Governor-elect Lincoln Chafee had to say.)
Major reforms to pensions, union contracts
Pfeiffer’s recommendations include the following:
New statewide pension system: Pfeiffer says the state should consolidate independent pension systems into one single statewide system—at the very least, he says consolidation should be mandatory for “low-performing or underfunded plans.”
Raise the retirement age, limit benefits: The Central Falls receiver says the state should raise the retirement age and limit the amount of income someone can draw from another government job after retiring. He also suggested: adjusting pension benefits based on Social Security benefits, supplementing traditional pensions with 401(k)-style plans, calculating benefits based on earnings throughout someone’s career, rather than what they made when they retired, and excluding longevity pay and allowances from being used to calculate retirement benefits.
Disability pensions: Pfeiffer says the state should create a partial disability retirement system, modeled on what the U.S. Armed Forces has. The goal would be to ensure that “the City is not paying full disability retirement costs for employees who have less than complete disability and can still work after retirement.”
New restrictions on union contracts: Pfeiffer is calling for a new law that would bar communities from entering into new union contracts after July 1, 2011 that have retirement benefits and health benefits that are more generous that what is allowed by statute. Likewise, he says communities should not be allowed to have contracts would “prevent the timely layoff or discharge of employees” when it’s related to lack of funds.
New union contracts every decade: Instead of letting benefits accumulate over time, Pfeiffer says union contracts should be drafted from scratch every ten years. In his words: “The State Receiver also observes that [collective bargaining agreements] tend to be accretive, which allows poor decisions from many years ago to burden taxpayers for years or decades to come. It may be appropriate to mandate that all CBAs be negotiated anew—not renegotiated, but negotiated from a ‘blank sheet of paper,’ as it were—every decade to ensure that bargaining agreements remain modern, commensurate with the municipality’s ability to pay and in the best interests of the public.”
Create a new program for laid off workers: Pfeiffer recommends that the state create a new program to help laid off city and town workers to transfer to equivalent positions in another community. He proposes that the state offer cash subsidies to the receiving communities, to give them an incentive to hire laid off public workers from somewhere else.
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