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Donna Perry: New Session Will Focus on Old Debts

Thursday, January 05, 2012

 

The gavel may have come down on a new legislative session in Rhode Island this week but old debt and old bad decisions are what will most command lawmakers’ attention in the coming days.

That’s because mounting deficits in several local communities vividly became a state problem at year’s end when East Providence was forced into a form of state intervention and Woonsocket threw out a plea for state help when it almost failed to meet weekly payroll in the school department in the final week of the year.

The fiscal fretting, stubborn deficits, and inevitable bad bond ratings have given way to a sobering reality that municipal fiscal problems of crisis proportions don’t begin and end at the boundary line of Central Falls.

As the 2012 legislative session starts, local communities need their own Gina Raimondo-like champion from within the ranks of state lawmakers who will make their plight the front and center issue.

By all indications, the city finances of East Providence, now being overseen by a state Budget Commission, are at the moment in more urgent condition than Woonsocket’s but not by much. Both cities have been carrying deficits from school department costs, are now carrying junk bond status, and seem to be lurching from one season to the next through an uncertainformula of stalling on bills, running up new deficits, and now, seeking to tap education aid to shore up cash flow.In fact, the pursuit of state aid in the case of both cities has meant pressuring the state to turn over their allotment of state education aid from the new funding formula earlier than what was scheduled. Woonsocket would have missed its school department payroll as December closed out if its share of state education aid-- $4.5 million – had not been turned over ahead of schedule. Likewise, East Providence is seeking to have its $12.5 million in education aid turned over now or the city could run out of cash within weeks. Both communities also face pension obligations that hover in the $100 million dollar range. It should come as no surprise that the local plans are not adequately funded and their current fiscal plight make vivid examples of why municipal pension reform must be achieved this session.

Widespread Challenges

But it’s also clear the dilemmas posed by this growing municipal debt crisis represent only part of the state’s widespread fiscal challenges.

A “Real and Present Danger” narrative regarding the state’s intake of revenue is taking shape and could prove to be an equally dramatic story.

Legislators will need to apply the same level of urgency and focus they brought to the statewide pension reform bill to a strategic approach to state revenue that is one part safeguarding present gambling intake, and one part big picture planning for new sources.

As Massachusetts goes forward with the siting of up to four gambling establishments, regardless of what plays out in Foxboro, our state needs a forward looking, aggressive and comprehensiverevenue plan, in which, like it or not, gambling has to play a central role. The state not only needs to safeguardthe$300 million a year present gambling activity generates, but also needs to enhance what present sites offer beyond the table games expansion option which will be on the November ballot.

It’s true that leaders like Speaker Fox have been speaking with urgency in recent days about the state’s need to protect its gambling turf but it could be the state has already gambled away too much time in disjointed deliberations about a destination casino of our own before the Bay State got into the game.

Rounding it all out is the backdrop of the election year and lawmakers’ instinct not to do anything too bold so as not to hand possible opponents an easy line of attack.

But they may find campaign oriented themes may start to surface much sooner than next fall.

“Save Our Cities” and “Don’t Gamble Away Our Revenue” may be appropriate slogans for 2012.

Donna Perry is a Communications Consultant to RISC, RI Statewide Coalition (http://www.statewidecoalition.com)

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