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Donna Perry: Communities in Crisis and the Flanders Roadmap

Thursday, March 08, 2012

 

If there were any lingering doubts that a municipal fiscal crisis has taken hold and is spreading in the state, events of the past week should silence the skeptics once and for all.The spectacle of one mayor pleading with hundreds of public sector retirees about unsustainable retirement benefits or another one giving sobering briefings to statewide officials about depleted city accountshave sadly become almost commonplace occurrences in Rhode Island this year.

The stormy encounter between Providence retirees and Mayor Angel Taveras over the city’s intention to rein in overextended retirement benefits took place just days before Woonsocket Mayor Leo Fontaine and other city officials pored over the bleak numbers facing his city.

The deficit and pension debt details may vary between the two cities but the broader theme remains the same: the escalating fiscal problems of Providence and Woonsocket come on the heels of the recent state takeover of East Providence, and all are manifesting certain conditions that were present when the receivership of Central Falls was triggered.

Untamed deficits, particularly in school departments, mounting local pension plan debt, and plummeting revenues are converging on municipal balance sheets and the consequences could be devastating. In Woonsocket, Mayor Fontaine has correctly characterized his city’s unfolding crisis as a case of “dire circumstances” and has stated that “bankruptcy is certainly on the table”since learning the city school department’s true deficit is now approaching $10 million, far higher than the $2.7 million of earlier projections.

RISC Municipal Fiscal Forum

Woonsocket’s dilemma is serious indeed yet the numbers pale in comparison to Providence, where the debt runs far deeper. The problems facing both cities and other communities will be on the discussion agenda when the state’s independent advocate for thetaxpayer; the RI Statewide Coalition (RISC); stages its annual Winter Meeting this weekend.

RISC has asked Central Falls Receiver Robert Flanders to give the keynote address and lead a panel discussion on the municipal fiscal crisis now facing several communities—and most importantly— what it will take to get them out of it. Flanders’experience with Central Falls, his proven agility to tame a municipal finance inferno and build a new financial foundation from the ashes, make him the state’s leading voice on the growing municipal fiscal crisis. It’s critical not only to understand the considerable achievements his receivership office has attained for the state’s tiniest city, but also to note that Central Falls today stands in far better financial condition than Providence, East Providence, Woonsocket, and beyond because of the turnaround job that Flanders has led.

Benefits of Flanders’ Receivership

Contrary to rising recent criticisms of the Receiver’s operations,being lodged by either disgruntled former elected officials or the city’s state SenatorElizabeth Crowley, the financial tab for the office of the Receiver is a miniscule cost when set against the significant savings and vastly improved efficiencies of local city government the receivership process has attained.

In fact, a key point Flanders’ harshest critics seem to conveniently overlook, is the reality that nearly $ 1 million ($782,580) of the estimated $1.8 million cost of the process has had to go for legal fees for the receiver’s own separate legal defense that was needed because of the multiple union court filings to challenge the authority of the Receiver in the first place! If the union’s persistent court battles had abated sooner, the legal tab for the Receiver’s office would have been that much less.

Flanders’ receivership has been about a whole lot more just the widely chronicled negotiations to trim retirees’ pension benefits. He and his team have instituted wholesale improvements to the day to day management of the city through strategic consolidations of jobs, functions, and departments that have translated into real savings that are expected to be at least $ 6 million this year and a whopping $30 million over the next five years. Their current attemptto consolidate the business office functions of the school department within the city’s own finance office is especially timely.

The present fiscal emergency that has now gripped Woonsocket is directly related to what is clearly becoming a pattern in local communities: overwhelmed school finance offices and superintendents that seem unable to keep pace with the complexities of present day school budgets. (State intervention in East Providence was similarly triggered by a school department deficit) The fact that Woonsocket officials have cited extremely poor record keeping by the departed Schools Superintendent that produced a $ 7.3 million dollar surprise is another vivid reminder that a Flanders-styled reform of merging school and city business operations could become an increasingly important option for other troubled communities.

Uncertain Road Ahead for Communities

In recent weeks, it’s understandable that both Mayor Taveras and Governor Chafee have vowed they will not allow Providence to go into bankruptcy, yet the path out of harm’s way for Providence seems far from clear. In contrast, Woonsocket’s Mayor has franklystated that bankruptcy is certainly an option that has to be on the table for his city at this point. Only the days to come will reveal whether the moment may be arriving when other elected officials will have to face up to a similar sobering reality.

It breaks down this way: if a city is operating with persistent deficits they can’t tame; annual required contributions (ARC) payments to pension funds they can’t make; is facing defiant, and court bound public sector retirees not interested in retirement concessions; and have maxed out taxpayers and plummeting revenues; then how can it be viewed as anything other than bankrupt, whether it’s been officially declared or not?

It’s going to come down to which roadmap will the states’ communities choose to follow: the road to recovery or the road to ruin?

RISC encourages all taxpayers to join in this important debate on Saturday, March 10th. Details at http://www.statewidecoalition.com.

Donna Perry is a Communications Consultant to RISC
 

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Comments:

Maybe Flanders will perform a little song and dance for the RI Statewide Coalition making fun of Central Falls and it's citizens like he did for the ProJO Follies show. He should be ashamed of himself. At $300 per hour, Flanders will be able to keep his membership at the Dunne's Club. Thank Goodness.

Comment #1 by watching providence on 2012 03 08

Ms. Perry states…”Flanders’ experience with Central Falls, his proven agility to tame a municipal finance inferno and build a new financial foundation from the ashes, make him the state’s leading voice on the growing municipal fiscal crisis. It’s critical not only to understand the considerable achievements his receivership office has attained for the state’s tiniest city, but also to note that Central Falls today stands in far better financial condition than Providence, East Providence, Woonsocket, and beyond because of the turnaround job that Flanders has led.”



Is she kidding? Anyone with no conscience, half a brain and unchallenged power could do the same thing. This has nothing to do with Judge Flanders.

You know Judge Flanders….he’s the retired judge who collects 100% of his highest yearly salary for the rest of his life on the RI taxpayers dime. From the pension fund he never paid a cent into. Now he has the power to cut everyone who fully contributed to their pension to pennies on the dollar. He gets full health care benefits for life but wants to incorporate a 20% co-share into other retirees’ costs.

The same judge who presided over a case that the Providence police and firefighters brought against the City to require them to make their annual contributions to the pension system in a timely manner. His decision was that the City was not required to make payments into the system “as long as all required pension checks were being paid”. He also warned the City in his decision that they “…better not come back to this court on a future date and state that the system is not able to make their required pension payments”.

This is the guy that RISC has sought to address them as an expert in municipal pension reform!!?? Unbelievable!!

Comment #2 by Tom Kenney on 2012 03 08

Municipalities that run toward bankruptcy to solve their problems are breaking the law. You can't jump into bankruptcy to break union contracts. It is time for the courts to put a break on these political hacks that may be tempted to avoid touch choices through bankruptcy. That is what Donna is suggesting...every time a city like the mismanaged Providence talks about bankruptcy they make retirees quiver. It's actually almost evil.

Comment #3 by Dave Barry on 2012 03 08

What gets me is that Flander's chief of staff, Gayle Corrigan, disappears from site when she her past misdeeds come to light. Then Flander's decides to do a stand-up comedy routine about being the dominate male in Central Falls. So ask yourself, is this worth $300 an hour? Has the Grand Receiver done anything to move the city forward? No, he hasn't. Houses are still boarded up, streets still filthy, no new businesses, and a bill by His Largeness for over a million bucks. Soon he will take his show on the road to Providence, Woonsocket, and East Providence. I don't know of any American city that is willing to trade democratic rights for the privilege of being "Flanderized."

Comment #4 by Joseph Fazio on 2012 03 08

Flanders for Governor 2014

Comment #5 by Odd Job on 2012 03 09

What a joke !!! This so called fiscal responsible person, who makes $395 an hour advising Mayor Tavares what he should do with pension crisis. Is the exact person who created the problem, when he ruled that the city did not have to fund the system. F@##$%N Rhode Island politics suck. The working person always gets screwed by these so called leaders !!!!

Comment #6 by Jim Okolowitcz on 2012 03 09

Dave--you got it backwards. Union contracts are driving the cities into bankrupcy...they aren't going there to break them.

Comment #7 by Mike Govern on 2012 03 09

@Mike,

How naive are you? Of course they are. They're all jumping on the "it's ok to break a contract" bandwagon!!

Comment #8 by Tom Kenney on 2012 03 09

Tom, what are your views on the 5%-6% annual compounded increases? What do you think should be done to solve Providences financial problems?

Comment #9 by Patrick Boyd on 2012 03 09

@ Patrick,

The 5% & 6% COLAs were a political maneuver that backfired on the City (and Cianci) and are completely out of whack. They need to be reined in by some means.

Any way the City chooses to proceed will be a legal fight because they will be breaking a contract. (They will not get a resolution from the retirees because all of the retirees are covered under different contract depending on whether they were teachers, Local 1099ers, fire or police. They are further divided depending on which CBA they were covered under at the time of their retirement – current retirees being asked to concede benefits have retired somewhere over the course of the past 30+ years.)

I propose that the City Council pass a resolution that future retiree’s (AND present retiree’s) pension benefits be capped at the level of compensation that the current employee filling his/her old position. This would cut (not freeze) pension benefits for approximately the top 100 – 200 pensioners (those who have taken advantage of an unfair system – albeit through the luck of the draw as opposed to intentionally scamming the system) without unfairly penalizing the pensioners receiving a modest to fair retirement benefit. I know of a retired captain from the PFD who served 37+ years and retired about 5 years ago who is receiving an annual pension of around $20K (no lie!).

The impression that all city retirees are raking in the dough at the cost of the taxpayer is false. But, every time I attempt to make that point someone quotes the pension numbers of the “top 25” retirees from Providence and no one believes my statistics – even though all the numbers are a matter of public record.


BTW - I am a 30+ year PFD firefighter.

Comment #10 by Tom Kenney on 2012 03 09

Also.....

A solution such as I proposed above would save the CITY far more than what the City is now proposing - especially immediate savings!!

Comment #11 by Tom Kenney on 2012 03 09

Geez, how does a fire capt. retire after 37 years and end up with a $20k pension? There's got to be more to that story.

Comment #12 by Patrick Boyd on 2012 03 09

@jimmy moroney,

lol you say, "worry about yourself, not the judge! ...who put his time in".

FYI - I am worrying about myself. And what am I? Nothing? Did I not put my time in? And everybody in the state has an opinion about my possible pension - most think I'll be robbing the taxpayers.

Even the judge (who put his time in) has no respect for those workers he considers beneath him (or not as priviledged) who have also put their time in. According to him we can all take haircuts or beheadings, while his pension is left alone.

That's why I called him out on this page. Not because I'm jealous of what he gets (you're right, he put his time in), but because he wants to take away from those of us who need the pension to pay our bills, not pad our portfolios!!

Comment #13 by Tom Kenney on 2012 03 10

@Patrick,

My bad,the numbers are right but his ex-wife gets 1/3 of his pension...that would bring it to around $30K.

Comment #14 by Tom Kenney on 2012 03 11

@ Tom Kenney & "watching Providence": you union THUGS make us puke.

Attacking the person is called: "ad hominem" attacks. They're the choice of the weakminded bullies you creeps show yourselves to be.

"THE UNION STEWARDS PRAYER" says: "Oh lord make me formidible in debate, logical in argument, and fearless in CONFRONTATION. Let me be a lawyer, actor, mathemetician, sage, philosopher, sociologist, and economist; pleasing, cajoling,THREATENING, and belaboring..."

Threatening!???! How pathetic is that?

Source: "Commonground newspaper" Feb. 2012 issue, page 2, left column.

Comment #15 by Paul Marshall on 2012 03 13

@ Paul Marshall:

Who threatened anyone???

Also, you say "...make us puke." Who's "us"?

Comment #16 by Tom Kenney on 2012 03 14

@ TOM KENNEY

"Threatening" is the word used in "THE UNION STEWARDS PRAYER" the accepted and revered mission statement of all unions. Check it out at: COMMONGROUND NEWSPAPER (John Tasoni editor)available online or free at news stands. It has other really antisocial and bizzare passages.

"US" are the average Joes who struggle every day to: pay bills/taxes, raise a family, follow the rules, keep the car on the road, believe in our institutions, volunteer, contribute to charities, stay informed. Guys your type would call "SUCKERS".

Comment #17 by Paul Marshall on 2012 03 14

Far from calling the average Joes suckers, the average Joe sounds like pretty much every fireman I know.

Comment #18 by Tom Kenney on 2012 03 14

Hey, Tom Kenney, join the land of the informed! Flanders GETS NO STATE PENSION AND GETS NO STATE MEDICAL COVERAGE. HE GETS NOTHING! He still works for a living at 62. He did not serve on the Court long enough to qualify for a state pension. You're welcome to your opinions but they should be factual.

Comment #19 by Irene Walls on 2012 03 14

@Irene Walls:

You are absolutely right. It had been widely stated that he was collecting a state judicial pension and I assumed it was correct. It was not. He only put in 8 years, not the minimum 10 years required to collect the pension. He then left and withdrew his money from the system but got no more.

This changes the personal jab I took at him, but the rest of my comments remain unchanged.

Comment #20 by Tom Kenney on 2012 03 15

Thanks, Tom, for admitting your facts were wrong. Unfortunately, many people believe this. As much as many want to vilify Justice Flanders, I know him personally and respect him. He didn't create these problems, he's just trying to correct them. I believe he is trying his best. And, yes, he is paid for his services.

Comment #21 by Irene Walls on 2012 03 15




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