Is Providence “Too Big To Fail”?
Friday, June 03, 2011
Talk of bankruptcy, actual teacher and police firings and layoffs, and the sound of desperate pleas to the General Assembly have surrounded Providence as it faces a monumental fiscal challenge.
“Too big to fail” has become a book title, a TV movie and an American catchphrase due to the bailout of Wall Street investment banks after the 2008 economic collapse. But does it apply to Providence, Rhode Island’s capital and largest city?
GoLocalProv asked a range of leading and highly visible civic figures to answer that question about the city, and offer their views on whether or not we must go to any lengths possible to keep Providence on its feet.
Paolino: “It ain’t Goldman Sachs”
Providence realtor and former mayor of the city, Joseph Paolino, Jr. said, “It ain’t Goldman Sachs,” when posed the question about the city’s future, citing one of the high-flying investment banks that reaped the rewards of the government bailout.
“Did you see the movie?” he asked, referring to the current HBO feature film. “You have to do what they did: get all the stakeholders in one room,” Paolino (at left) said, referring to when then-Treasury Secretary Henry Paulson gathered the CEOs of Wall Street top investment firms for a weekend at the Federal Reserve to demand that a way out of the economic crash be figured out among them.
‘The legislature should not adjourn until the pension reform is achieved,” Paolino said. “Eliminate the abuse, and keep the pensions people were promised. We need to see a package.”
“Everyone has to walk out of that room saying ‘Ouch!’ That’s how you know you have gotten somewhere, if everyone hurts a little,” added Paolino.
Sasse: National Reputation at Stake
Gary Sasse, former Director of both Revenue and Administration under Governor Carcieri; fiscal consultant to the Providence City Council; and all-around RI economic expert, got straight to the point: “If Providence fails, Rhode Island fails.”
“The state’s economic health is inextricably linked to Providence’s health,” Sasse said. “It would be impossible for Rhode Island to succeed if Providence fails.”
“The impact of Providence failing on Rhode Island’s national reputation would be too much to bear,” he said.
White: “Look the problem straight in the eye”
Laurie White, president of the Greater Providence Chamber of Commerce, responded to the question, “No. In today’s day and age we are all in this situation. Organizations, businesses…all would question are they too big to fail, and so far (elsewhere) that has proven otherwise.”
“A lot of people are worried about it…there is a lot of concern,” she said. “So goes Providence, so goes the State of Rhode Island.”
She also agreed with Sasse’s assessment about the fallout from a total breakdown: “The p.r. storm would be enormous. You couldn’t get out from under it for two decades. Vendors wouldn’t want to do business with the city. Who wants to do business with an entity that couldn’t pay for services? The city’s instability – the fear and anxiety – are lethal…toxic to businesses looking to invest.”
“People need to know where we are,” said White, and praised the city’s legislative agenda that calls for assistance from the General Assembly on issues such as retiree health care being moved into Medicare.
“I am very hopeful about the General Assembly,” she added, in regard to its moves to help Providence through the new businesses projected for the soon-to-be-created Knowledge District.
“We need to take dramatic measures,” she said. "To look the problem straight in the eye, and get it behind. But I am confident we can turn it around.”
Steinberg: Collective Will
Neil Steinberg (at right) is executive director of the Rhode Island Foundation, the state’s largest philanthropic community organization that has made its focus assisting people and institutions that need help throughout the state from its Union Station headquarters.
“There are things right now that have to be done and long-term things that should get done,” he said in a statement to GoLocalProv. “Addressing the immediate financial need has to be done NOW and the mayor is dealing with that every day. Economic development and improved public education are longer term projects that have to start now. But everyone needs to step up to walk the walk!”
“Regarding the non-profits, any significant cutback in support for human services, the arts, education, etc. creates more of a demand for services supplied by the non-profit sector,” Steinberg said. “Resources are challenged to meet that demand as it is. So prioritizing, collaborating, and leading become key.”
Wolf: Feel the Vibrancy
“Providence is much too important to fail,” said Scott Wolf, executive director of Grow Smart RI. "It has too much going for it to fail.”
“Despite the fiscal problems, Providence has tremendous potential; all the urban amenities without the urban hassles," he said.
"It is a revitalization model in many ways among other cities,” Wolf said, citing the strong arts community, the highly regarded restaurant trade, and health-oriented businesses, as well as infrastructure projects like revitalization of the historic districts and the downtown river repositioning. “That stuff won’t go away. It is a major marketing asset.”
Wolf thinks a lot is said about the loss of stalwart industries such as manufacturing, but says, "We hear less from the knowledge economy. They are young, from out of state, and Rhode Islanders by choice, not by birth. They are bullish about Providence, and we’ll feel better if we start talking to them.”
“When I walk around the city, I feel the vibrancy, not the fiscal crisis,” he said. “It really is a tale of two cities.”
Gist: Providence An Educational Symbol
Deborah Gist (below left), commissioner of Elementary and Secondary Education in the state, has felt some of the current anger in Providence as teachers have been laid off and schools closed. But she is on a larger mission.
Gist said, “Providence students make up about 16 percent of the public-school population in Rhode Island. It’s pretty obvious, therefore, that to meet some of our statewide goals, such as an 85-percent graduation rate by 2015, we are counting on significant improvements in the Providence schools. As our largest city and our state capital, Providence is a symbol for the accomplishments and aspirations of all Rhode Islanders.”
“Let’s work together to make Providence a shining example of great teaching and learning,” Gist said.
Baudouin: It Cannot Fail
Dan Baudouin is executive director of the Providence Foundation, which is dedicated to the economic and community revitalization of Providence, offering strong support for reviving the downtown business district.
"Under any scenario, the City of Providence cannot fail,” Baudouin said.
“It isn’t too big to fail, it is too important to fail,” he said. “We should have enough assets to make sure it does not fail. All the economic assets, the cultural assets, the transportation assets it has, it is really important not to fail,” he said.
“If you look at the employment statistics, Providence makes up 25 percent of the state’s employment,” said Baudouin. “That is a big percentage for one community. The city is an indicator for (economic health) for the state, and even for the region. But as the mayor has proposed, we now need significant action.”
DeBare: Without A Paddle
“If Providence is going down the river without a paddle, then we have to get them a paddle,” said Deborah DeBare, executive director of the RI Coalition Against Domestic Violence. “Providence is the central hub, and for such a small state, we have to all swim together.”
“We do our work statewide, and we have responsibility for dealing with domestic violence in all of the state,” she said. “We don’t have any town boundaries.”
“But we are all part of Rhode Island. If one place gets in trouble, we’re all in trouble,” DeBare said.
Jedele: Success Needed in Urban Areas
Tricia Jedele is director of the Conservation Law Foundation’s RI office, and also president of the Environment Council of RI, positions with often overlapping missions.
“It is important that Providence succeeds in the way we want all cities to succeed,” Jedele said. “People must view Providence as an attractive and efficient place, and for livability and desirability, that is important.”
“You want to see success in urban areas, because they are already densely populated," she said. “You don’t want to see people leave, because they will then drive more (which is bad for climate change impacts), use more water, and generally contribute to more environmental problems.”
“We need to keep our urban places, to help them thrive and succeed,” Jedele said.
Glover: Who’s Going To Bail It Out?
“Who is going to bail Providence out?” asked WHJJ radio show host Helen Glover (at right). “The state has its own economic problems.”
In regard to the options Providence has at its disposal. Glover said, “I don’t get any indication that the General Assembly or governor won’t raise taxes. And I don’t see any job growth on the horizon.”
Citing Detroit, which closed nearly half its schools, and Camden, NJ, which laid off nearly half its police force, she said, “Nobody talked about bailing them out. I’m not sure we can help. “
“Everyone wants to talk about bailouts and new taxes. But Rhode Island’s taxed out,” said Glover. "I’m not sure what you would have to do to bail out Providence.”
But she believes that the city is certainly trying to succeed.
“I have been very impressed by Mayor Taveras,” Glover said. “He’s making some really hard choices. I hate to say it, but I think he’s going to come up short. He won’t get the union concessions. And he may not get things passed in the General Assembly in time.”
“I think we are going to see a serious situation in about a month,” she concluded.
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