NEW: Council President Says Without Concessions, Providence Will Go Bankrupt
Thursday, March 15, 2012
City Council President Michael Solomon said Wednesday that if Providence doesn't receive concessions from retirees and increased payments from tax-exempt institutions, the cash-strapped capital city will be forced to file for bankruptcy.
“I believe what we are asking of our tax-exempts and retirees is fair and reasonable, but to date they have not joined in the effort to save our City,” Solomon said. “If they do not realize that through shared sacrifice there is a shared solution then bankruptcy will be the only option.”
Solomon's statement came hours after Fitch Ratings downgraded the city credit rating by three notches as a result of the capital city's deteriorating fiscal condition.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe city was downgraded to 'BBB', just two notches above junk status.
"The three-notch downgrade and Negative Outlook are a result of the continued decline in the city's financial flexibility over the last 12 months, leaving the city in a weak liquidity position," the Fitch report noted. "This risk is compounded by Fitch's concern about the city's ability to address future-year structural deficits."
The city is attempting to freeze cost-of-living-adjustments for retirees and obtain $7.1 million in additional payments in lieu of taxes from tax-exempt institutions in hopes of closing a $22.5 million deficit. Mayor Angel Taveras has warned that bankruptcy or a supplementary tax hike are potential option if the city can't close its shortfall in the current fiscal year. But Solomon has said a tax increase is "off the table" as far as the City Council is concerned.
“This news confirms the gravity of the fiscal challenges facing Providence,” Solomon said. “Over the last year we have worked hard to eliminate approximately $80 million of our structural deficit. Numerous parties, including taxpayers, teachers, police officers, firefighters and other City employees have stepped up to the table and sacrificed to preserve this City; however, our retirees and tax-exempt institutions have not.”
