******************** THIS BLOG HAS MOVED TO WWW.LEGALINSURRECTION.COM ********************

This blog is moving to www.legalinsurrection.com. If you have not been automatically redirected please click on the link.

NEW COMMENTS will NOT be put through and will NOT be transferred to the new website.

Wednesday, May 19, 2010

Rhode Island City Files For Receivership

Central Falls, a Rhode Island city which gained fame when it fired its entire High School teaching staff after unions refused concessions (the unions later agreed), now has filed for receivership, the state equivalent of bankruptcy:

A Rhode Island city facing a severe financial crisis was placed in temporary receivership Wednesday, a drastic step officials said was necessary to balance the budget and restore order.

Central Falls said in a petition for receivership that it faces a $3 million deficit in its $18 million budget, can't afford its pension fund obligations and is hobbled by revenue shortfall and cuts in state aid. The city is in "extreme fiscal stress," the petition states.

"This is a situation that no one wants to be in," City Councilman James Diossa said Wednesday.

Central Falls is the first Rhode Island municipality to seek receivership, said Jonathan Savage, a lawyer who was appointed Wednesday as temporary receiver by Superior Court Judge Michael Silverstein.

The appointment transfers day-to-day operational control of the city to Savage, who specializes in receiverships and says he'll have the authority to recommend the renegotiating of municipal contracts or tax increases.

"Everything that goes on in the city of Central Falls will ultimately need my approval and consent," Savage said.

Updates: The Providence Journal fleshes out the dilemma facing Central Falls, including the fact that it is in the middle of union contract negotiations:

On Tuesday night, the City Council, in a vote of 4 to 1, agreed to pass a resolution that would ask Providence County Superior Court to place the state's poorest city in receivership.

Receivership is the state-law version of federal bankruptcy. In it, the court-appointed receiver has the power to go over the municipality's finances, approve or reject purchases and payments and, if the court approves, change contracts with unions and vendors.

Savage, speaking to a group of reporters in a conference room at his law firm's Pawtucket office, declined to predict what actions he might ask the court to take, from imposing new contract terms or increasing taxes, until he'd had a chance to examine the city's books and consult with representatives of all the parties who might be affected.

City Solicitor John T. Gannon said the city is the middle of all its municipal employee union contacts. Mayor Charles D. Moreau has been trying to negotiate concessions, but without success.

No joke, Central Fall's motto is "A City with A Bright Future."

Update 6-14-2010: Unions Rescued In Rhode Island

Related Posts:
Union Teacher Hangs Obama In Effigy
Dem. Legislator Files Arizona-Like Immigration Bill in Rhode Island

Follow me on Twitter and Facebook
Bookmark and Share


  1. The first of many to come, this "receivership." Somehow people will learn, it just stinks that we all have to suffer - along with the Utopians and unicorn-riding leftists who kow-towed to the union bosses - when their balloon bursts. Is it greed? Power? Something else? I am sure it's a toxic combination of all 3 that has caused this debacle. LA and California, New York, Boston and Massachusetts - which will fall next?

  2. I have to admit, I didn't expect the American version of the European fiscal collapse to get started quite so soon. Let's hope we can set our ship aright with far less violence than Greece, et al. have witnessed.

  3. Here's the latest plan for union bailouts.
    From GetLiberty.org



    "Operating under the benign sounding title, “Create Jobs and Save Benefits Act of 2010”, Casey’s bill is actually nothing more than a transfer of approximately $165 billion in Big Labor’s pension debt over to the U.S. taxpayer."