Tom Sgouros: We All Are Central Falls
Monday, August 08, 2011
For any complicated situation, it's difficult to say anything definitive about causes. What, for example, is the cause of a cancer? Is it diet, toxins, heredity, luck? It can be all or none of those things and asking the question this way is mostly just dumb. However, it's important to be aware of all the causes when you're looking for a cure -- and when you're trying to prevent it.
With that in mind, let's talk about Central Falls. It seems as if it's fashionable to wail about unions and pension funds as being the sole cause of their problems. I was on a television panel last week where my co-panelists insisted pension funds caused the bankruptcy, and used that claim to counter any suggestion that the state might have played some role in the downfall. It's absurd to claim that there be only one cause, and I do not claim that. But there are some causes that don't get much attention and that are far more important than is widely understood. And since the cost of pensions is getting plenty of play in other outlets, I'm going to look at the others instead today.
It was 20 years ago, in 1991, that the state took over the Central Falls school system. The schools were failing and the city did not have the resources to meet the Basic Educational Program (BEP) set out by state requirements. The schools themselves are a long story; I bring them up only to say that 20 years ago, it was quite clear that the city's local revenue could not meet its expenses.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTCentral Falls isn't the only place that can't pay its bills.
In itself, this is not terribly unusual. Rhode Island has many localities where the local revenue cannot possibly meet the expenses of the local services. Olneyville is one, as are Arctic, Elmwood, South Providence, northern Pawtucket, North Tiverton, and lots of others. People get short with me when I suggest that Cumberland has a responsibility to Central Falls, but no one thinks it strange that Wayland Square has a responsibility to Olneyville Square. The first two are different cities and the second two are both part of Providence, but what is that beside a historical accident? Olneyville is fortunate to share its city with the East Side, while Pawtucket has Oak Hill to balance out Broad Street and North Tiverton has the southern end of town. Tiny Central Falls is just a poor neighborhood without any rich neighborhood to go along with it.
It wasn't always that way. On Saturday I published a ranking of the richest towns in the state, circa 1950. (Central Falls was number five, just behind Providence, Pawtucket, and Woonsocket. Except for Narragansett at number one, our state's cities were the richest communities in the state -- the country was for hicks. But then we built highways for all the new cars, and suddenly it was easy to commute to work in the city from the country. The resulting shift of people from city to suburban countryside was biggest demographic shift in our nation's history. The departure of the textile industry played an important part, too and together these two forces propelled our cities from the top of the ranking, right down to the basement. By the early 1990s, the four cities that had been among the five richest towns in the state had become four of the five poorest instead.
If you want to argue that corruption and unions were the cause of this decline, you'll have to come up with a reason that Warwick and Johnston -- places with a heavy union presence in their government and no strangers to official malfeasance -- rose in the rankings and Cranston and North Providence -- ditto -- remained at about the same level. Corruption is a scourge on our state, but it can't explain this shift, nor can unions, which are in all our towns. The flight from the cities can explain the fall of the cities, and also the rise of the suburbs, including the inner suburbs like Johnston and North Providence.
In 1950, Central Falls boasted twice the wealth of East Greenwich per student in its schools. By the early 1990s, Central Falls had less than one ninth as much, and today it's less than one sixteenth. It's possible that corruption and mismanagement made the town more expensive to run, but this was hardly the reason for the evaporation of their wealth.
The point here is that forces far larger than Central Falls city hall conspired to impoverish what was once among the nicest communities in our state -- and the process was underway long before the establishment of the public employee unions or before the wave of hispanic immigration. So long as our towns rely so heavily on local wealth to support local services, there will not be a solution to Central Falls's problems. Or Pawtucket's, Woonsocket's, or Providence's.
State was indifferent.
So much is bad enough, but to this accumulating misfortune, we added the utter indifference of the rest of the state (fueled at least in part by animus to public employees and immigrants). For if one thing has been made crystal clear by the past year, not to mention the past 20, it's that apart from a little money grudgingly given, Central Falls is now on its own. Sure the state can appoint a receiver to close things down, and try to fidget with federal bankruptcy laws to make sure that bondholders are paid before elderly librarians, but exactly how does that count as help? Exactly how would things have been different if the state had let the town manage bankruptcy on its own, as it tried to do in 2010?
Worse, the state is the prime culprit in precipitating the crisis. In 2007, Central Falls relied on the state for $3.9 million in aid to balance their budget. By 2010, that number was $630,000, which amounted to a 20% cut in the city budget. During those same years, the state cut income taxes for rich people by tens of millions, an expense no one forced the state to make. In other words, tax cuts for rich people were deemed more important than the health of our cities by Governor Carcieri, the leadership of the General Assembly, and every other person who cheered on the state tax cuts that created such pressure on Central Falls and all our municipalities.
What the history of Central Falls says to me is that relying on local revenue alone to fund local expenses doesn't work. For 20 years -- 20 years! -- this canary has been gasping, telling anyone who cares to look that our system of funding local services is unfair, inefficient, and expensive. You hear people complain all the time about how our local services are organized to be inefficient, with 39 little towns managed independently. Is it not equally inefficient to try to fund equivalent local services from towns of such disparate wealth? Pawtucket doesn't assess higher taxes on Broad Street than it does in Oak Hill, but the state of Rhode Island stands by while exactly that happens among its municipalities. Again, Central Falls' primary problem -- and that of the rest of our cities -- is its cataclysmic loss of wealth, and any "solution" that doesn't address that is bound to fail in the long run.
The problem, as it's been expressed to me by legislators and town councilors I've spoken to about it, is that having Barrington subsidize Central Falls is political poison. But again, Wayland Square subsidizes Olneyville Square and the city of Providence is stronger for it. We have let Central Falls fall. We didn't have to do that. No one forced state policy makers to choose income tax cuts for a few thousand people over state aid to cities and towns. And the warnings about the consequences were hardly obscure. Not only is this to our shame, but we are also a weaker state for it. Our bonds will become more expensive to service, and because the inefficiencies of our local governments and growth patterns are as important as high wages, bullying a couple of unions into submission isn't going to make public services appreciably cheaper. (You may not believe me, but mine is the minority view, so we'll likely get to see if you're right.) We will be a stronger state -- and a less expensive one -- when we take care of all of our citizens, not just the ones who can afford to live in the suburbs.
Tom Sgouros is the editor of the Rhode Island Policy Reporter, at whatcheer.net and the author of "Ten Things You Don't Know About Rhode Island." Contact him at [email protected].
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