We all know the economy is struggling right now. Unemployment is high and the stock market and real estate market are on the decline. But the economy doesn’t affect just individuals and businesses. City governments are struggling financially too.
Drowning in debt and unable to seek concessions from city employees, the struggling Rhode Island city of Central Falls filed for bankruptcy Monday. The city, north of Providence, has a population of 19,000 living in roughly a square mile.
It isn’t alone in seeking court protection. In March, Idaho’s Boise County filed for Chapter 9 protection after it was found in violation of a federal law and ordered to pay $6.2 million to a housing developer. Central Falls took the step after it was unsuccessful in asking police and firefighter retirees to give up 50% of their pension.
“In the end, we were left with no practical option,” said former State Supreme Court Judge Robert Flanders who has overseen the city’s finances. “We cut city services to the bone, we raised taxes to the maximum allowable, we negotiated with Council 94 and fire and police unions without success,” he explained. “We needed cooperation and monetary agreements from all sides to make this work,” Flanders said. “That didn’t happen, and so that’s why we’re all here today.”
Without the filing, it projected a deficit of $5.6 million by next June — based on $22 million in expenses and $16.4 million in projected revenue.
(Source: cnn.com)
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