Providence Bond Ratings in Question: Agencies to Meet With City
Tuesday, February 07, 2012
Providence officials will soon meet with representatives from the three major credit rating agencies – Standard & Poor's (S&P), Moody's, and Fitch Group – to discuss the city’s financial problems, city leaders confirmed Monday.
The credit rating companies reached out last week after Mayor Angel Taveras held a press conference to outline the city’s “fiscal crisis” and explain that Providence could be “on the brink” of bankruptcy if it is unable to cut retiree benefits and collect about $7.1 million from the city’s tax-exempt nonprofit institutions.
The city is currently facing a $22.5 million budget shortfall for the 2012 fiscal year, according to Director of Administration/acting Chief of Staff Michael D’Amico. City officials have also warned that the city could run out of money by June and end up $46 million in the red by July.
“We Need to Get There”
Following a municipal strategy session with the Governor, Senate President M. Teresa Paiva Weed and members of the Providence delegation in the General Assembly, Taveras said he is encouraged that so many elected officials appear willing to support the capital city.
But the city is still in wait-and-see mode on several issues that could help cut significantly cut the deficit this year. City lawyers are expected to meet this week with Supreme Court officials to see whether they can expedite an appeal of a ruling made last week that guarantees retirees lifetime health benefits from the city.
In addition, Taveras spoke of positive news that could soon come from the tax-exempt intuitions. The city has been in a public battle with Brown University, but it hasn’t yet reached an agreement with any of the nonprofits. Only Johnson & Wales is said to be close to a deal with the city.
“We need everyone to come to the table,” Taveras said. “The bottom line is we need to get there.”
Bankruptcy Questions
The city will likely have to answer questions about the status of those two issues specifically when it meets with the ratings agencies. Mayor Taveras has called bankruptcy a “last resort” and confirmed again Monday that he would consider a supplemental tax increase as an option if it can help the city avoid going broke.
“The consequences of a capital city in this country going into bankruptcy would be severe,” Taveras said.
Taveras has also met with Central Falls receiver Judge Robert Flanders to discuss the work he did in Central Falls, the tiny cash-strapped city that filed for bankruptcy last summer. Taveras said he is hoping his city does now follow a similar path.
“He has had experiences that I hope we never have,” Taveras said.
City Council President Michael Solomon has said a tax increase is “off the table,” but during a finance committee meeting last week, internal auditor Matt Clarkin said there are other potential options for addressing the city’s current shortfall.
A Structural Problem
To address the possibility of running out of money by June, Clarkin suggested the city could: defer vendor payments, freeze hiring, limit purchasing to only vital needs and eliminate all but emergency overtime.
For July, when the cash-flow problems balloon to nearly $50 million, Clarkin said the borrowing of tax anticipation notes (TANs) or accelerating the state PILOT payments would be an option
But Taveras has long been hesitant about borrowing money and other one-time fixes. He said the city needs to address its structural problems.
"We want to make sure we're not back here six months from now,” Taveras said.
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Comments:
anthony sionni
2:46am on Tuesday, February 07, 2012
"To address the possibility of running out of money by June, Clarkin suggested the city could: defer vendor payments, freeze hiring, limit purchasing to only vital needs and eliminate all but emergency overtime."
They have a new worker in the city council office and she is no intern as they lie and say she is!
"But Taveras has long been hesitant about borrowing money and other one-time fixes. He said the city needs to address its structural problems."
Maybe Taveras should start cutting down on his $500,000 police detail,does he think hes the President,drive yourself around or privatize to save money.
How about cutting the city cellphone bill down,nearly 300,000 for cell phones is a lot of money.
Then cut down on your high paying salaries,cut everyone down to 75,000, heck I could live on that!
David Beagle
10:17am on Tuesday, February 07, 2012
The mayor can fool the residents saying he's cut to the bone, recieved concessions from unions and done everything humanly possible, blah blah blah, but these credit rating agencies can see through this. They know if a city is stone walling.
Lance Chappell
11:03am on Tuesday, February 07, 2012
There should be NO tax increases - your feeding a money machine that knows no limits. This machine is driven by decades of sweatheart union contract giveaways that the city can no longer afford. Six figure retirements is an affront to every taxpayer of this city. When you have a retired fire chief’s pension approaching that of a retired supreme court judge, something is seriously wrong. Where is the administration on this one?
Flanders must step in and start the process - the city lacks the financial will to correct their mess. The taxpayers have been exploited enough. Once the bankruptcy word is said, the bond rating agencies pick that up and like dogs, will be on the hunt. The state house political establishment is worried that if Providence goes bust, it will take down the whole state. That is assured as the state is not that big. What can be underscored is the fact that Rhode Island has too much government and it needs serious consolidation. We waste tons of taxpayer money on duplicity and this must end. The population is declining and you will only have the illegals and senior citizens to try to draw on. The revenues are not keeping up with the expenditures and some drastic cuts are needed. For the public unions, the hay ride is over and those contracts will be adjusted for the times.
john paycheck
11:17am on Tuesday, February 07, 2012
“The consequences of a capital city in this country going into bankruptcy would be severe,” Taveras said.
the consequences of trying to keep every city employee employeed and happy and the city continues to die a slow death are much worse.
Charles Drago
2:22pm on Tuesday, February 07, 2012
The same Providence that David Cicilline says he left in excellent financial shape?
Well, David, there are two -- and only two -- explanations for the economic ruination of Providence.
1. You sacrificed Providence on the altar of your political ambition and then lied about it.
2. You left Providence in excellent financial shape, and Angel Taveras has brought us to the brink of bankruptcy.
So -- and this is like asking Stevie Wonder to review his new Blu Ray player -- what is the truth, David Cicilline?
Are you incompetent and dishonorable?
Or is Angel Taveras to blame for the economic ruination of Providence?