Tuesday, August 02, 2011
Central Falls, Rhode Island Files for Bankruptcy
Yesterday, the city of Central Falls, Rhode Island filed for bankruptcy after it was unsuccessful in convincing retired police officers and firefighters to forego 50% of their pension. The city faces massive debt and without these concessions, bankruptcy became the only viable option to keep the town afloat.
Central Falls is a tiny town covering approximately one square mile with a population of 19,000. The city’s debt was expected to reach $5.6 million by next June if it failed to file for bankruptcy. Due to a dwindling population and the accompanying reduction in tax revenues, Central Falls has struggled to generate enough revenue to cover its expenses.
“In the end, we were left with no practical option,” said former State Supreme Court Judge Robert Flanders. “We needed cooperation and monetary agreements from all sides to make this work. That didn’t happen, and so that’s why we’re all here today.”
Last year, the city was forced to fire every teacher in the high school when the district failed to reach an agreement with the teacher’s union regarding compensation for increased hours at work. The teachers had been asked to spend more time with students in order to improve failing test scores. Due to the impasse, the school’s principal, three assistant principals, and 77 teachers were let go.
This situation is not unique to Central Falls. In March, Boise County in Idaho filed for Chapter 9 bankruptcy after a violation of federal law forced the county to pay $6.2 million to a housing developer.