May 19, 2010
What is Municipal Receivership II
Here is one aspect of the aforementioned exploration.
Receivership usually means that an organization, as it has been, is going away. A city itself, of course, can't actually go away solely due to fiscal problems. And only in the most extreme of circumstances could a city government go away, or even change very quickly, because of money troubles, in the same way that a private organization might.
So if municipal government is still going to be around after a receivership, albeit with a different cost structure, but with fundamentally the same organizational structure, then what municipal receivership mostly means is that city officials are going to get somebody else to make the tough choices, and then have the full authority of their official positions returned with very little in the way of direct consequences. This is a problem in terms of accountability.
So if units of municipal government are allowed to treat their fiscal problems with a concept like receivership which isn't entirely compatible with the nature of governmental organizations, shouldn't a city council and mayor submit their resignations along with a receivership petition, to show they really have exhausted any options they have to offer, and that no parts of their organization are off-limits to radical change?
As an answer to your question, yes. An alternate solution would be for public officials to be forced to perform community service for a length of time equal to the time they spent in office. Since other town assets are being dispersed, it's only fair that they are included.
Posted by: Mario at May 19, 2010 10:59 PMThe problem with a state receivership is that the state has no powers to change the debt structure of Central Falls contracts whereas Chapter 9 Federal law can change everything. So receivership is just a prelude to the state paying all their bills - thats it.
RI Law does not specifically deny a municipality to file Chapter 9 rather RI ignored the 1994 Bankruptcy Reform Act altogether and would have to pre approve a Central Falls filing.
Unfortunately RI will oppose anything that changes a union contract etc. This state is beyond belief.
The only thing that will come from this is more and more of the Central Falls bills and ongoing obligations being paid by state taxpayers. The schools there just took on new costs with extra time and pay for the teachers (this is not a comment on that other than to point out the cost). Central Falls hasn't paid a dime towards their own children's education since 1991. Next year they were supposed to begin paying $11 million towards their own school costs (phased in over 10 years). Thats never going to happen. Their pension is the worst in the state funding wise.
This is the end result of a failed and unenforced immigration policy. 19,000 and the state suspects there are many more. Who doesn't want to fill out a census form? One guess.
Posted by: doughboys at May 19, 2010 11:12 PMI'm a Pawtucket resident, and my girlfriend works in Central Falls, so I'll hazard a guess that I'm probably at least geographically closer than most AR readers to this.
As much as regionalization should 'come from the bottom', the situation in CF and Pawtucket seem clear to me. Pawtucket should absorb Central Falls, and we should do it without expanding our budget footprint.
That might sound extreme, but it's really not. I'm pretty confident that the city of Pawtucket could assume the streets, students, and police patrols of Central Falls with existing resources. Pawtucket is considering shuttering schools for lack of students, so that aspect should be manageable.
It seems the Christian thing to me (and I was raised in a very conservative church) to help thy neighbor in this case. Pawtucket has expanded its government beyond the actual demand; our little neighbor is bottom-up, perhaps we can find a solution by tasking one with stewardship of the other.
Obviously, there are a lot of issues to be hashed-out, but it seems to make sense to me to try to reform Pawtucket's dysfunctional status by growing our responsibility without growing our financial footprint.
Posted by: mangeek at May 20, 2010 12:25 AM"Unfortunately RI will oppose anything that changes a union contract etc. This state is beyond belief."
LOL. Yeah, "Twilight Zone: RI" might be a good title for a TV show.
Seriously though, if you believe today's PROJO the receivership CAN indeed change contracts.
I don't think the state will just come in and bail out CF because if they do that NP, EP, WW, Woonsocket, Pawtucket and the capital city will be in receivership quicker than you can say "retire at 39 with full pension, COLA's and free health insurance for life".
You never know in this state though. Anyone want to take a bet the sales tax will be 9% by the end of next year?
It's 10.25% in those other "progressive" paradises of California and Chicago.
somewhat off topic, but I was thinking last night...Can we just bulldoze the entire city (move the residents to Providence, Pawtucket, etc.) ? Then build the casino and Victor Moffitt's (sp?) aquarium on the spot...or maybe move the airport there? (yes, I know they airport takes up 1.7 sq miles and CF is only 1.2 sq miles)...but this is an opportunity to think out of the box....
Posted by: tcc3 at May 20, 2010 9:50 AMADJUSTMENT OF DEBTS OF A MUNICIPALITY › TITLE 11 - US CODE - SUBCHAPTER I -
GENERAL PROVISIONS
11 USC 903 - Reservation of State power to control municipalities
This chapter does not limit or impair the power of a State to control, by legislation or otherwise, a municipality of or in such State in the exercise of the political or governmental powers of such municipality, including expenditures for such exercise, but
(1) a State law prescribing a method of composition of indebtedness of such municipality may not bind any creditor that does not consent to such composition; and
(2) a judgment entered under such a law may not bind a creditor that does not consent to such composition.
Posted by: doughboys at May 20, 2010 1:59 PM"may not bind any creditor that does not consent to such composition"
Welp, that's not going to help with the biggest part of the budget problem.
Posted by: Monique at May 20, 2010 6:10 PM