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Rhode Island City Files For Bankruptcy

August 4, 2011 by  

A city in Rhode Island recently filed for bankruptcy.Central Falls, R.I., has applied for bankruptcy under the supervision of the State-assigned receiver after retirees and current workers failed to agree on cuts to their pensions and benefits, according to The Associated Press.

The city has been in a financial crisis for the past several years, and has already cut jobs and programs as much as possible. The failed agreement forced Robert G. Flanders Jr. to declare bankruptcy on behalf of the city, according to the news source.

Because an agreement could not be reached, pensions of former employees and spouses will now be cut by approximately 50 percent, according to The Providence Journal. The average pension is $32,000.

According to the news source, Flanders will void police, fire and municipal contracts as part of the bankruptcy filing and will also make retirees and active employees alike pay for 20 percent of their health insurance.

Members of the city have been critical of the receiver. The former mayor, who was demoted to adviser, told the AP that he thought bankruptcy was the only option long before Flanders decided to declare for it.

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  • http://naver sook young

    I guess this is what happens when people refuse to tighten their belts and unions get to be more greedy. I pray that they recover. Thank you.

    Sook Young
    Wife of the Samurai

    • skippy

      Well, sook, I agree…and I am afraid this is only the beginning. Sure sounds like a cute little town, too bad.

    • independant thinker

      re oh where is happy eddie he isn’t on here defending the indefenceable (unions).

      • independant thinker

        oops that should be “Where oh where”. My fingers and keyboard are fighting this morning.

    • coal miner

      Wrong sook young,
      Unions are not the blame.Try the Republicans,your hero George (scab) Bush.

      USA report:

      10 States Ready to Go Bankrupt – Bad Implications for USA
      Executive Summary – There are now 10 states in the USA that are insolvent and expected to file for bankruptcy in the fairly immediate future (2010).

      Which 10 States – California, Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin. These 10 states account for over one third of the USA population and this is significant. Think of it is more then 33% of the USA going bankrupt.

      Other States on the Endangered Species List – Colorado, Georgia, Kentucky, New York and Hawaii. These states are in bad shape and can easily get pushed over into bankruptcy.

      Which States are Financially Solvent – Only two. Montana and North Dakota, which actually has a $1.3 billion dollar surplus.

      Why They Are So Bad Off Financially – High Foreclosure rates, high unemployment, budget deficits, political and legal blocks to having a balanced budget, poor money management.

      Real Estate – Declining real estate values cause homeowners to have their house prices adjusted for purposes of paying lower property taxes causing a drop in property tax income revenue. High foreclosure rates means unoccupied homes. That means no taxes on phones, water, cable, Internet etc. More lost revenue. There are very few new housing starts, which means lost jobs and no payroll taxes, and no sales taxes on building supplies and materials. There is also a loss of revenue from building permits and other revenue. A lot of retail space and office space is going vacant which again means lost revenue.

      High Unemployment – This means a drop in state income taxes and a drop in city and county taxes as well. This also causes high unemployment benefits with extensions, which hurts the state especially with a shortage of employers paying into the fund due to a large amount of lost jobs.

      Retail Sales – Of course with such high unemployment these retail sales are off and thus the sales taxes paid to the states, cities and counties is way down further reducing their revenue.

      Auto Sales – The big drop in car sales has hurt Michigan and of course caused lost jobs nationwide.

      Tourism – The drop in tourism has caused Nevada to lose a lot of tourism business resulting in jobs lost and the casinos and hotels are in trouble financially with their debt load. Tourism brings Nevada a lot of special tourist taxes that are now way down. Florida and New York are also tourism states and tourism revenue in these states is down.

      Timber – This is low due to few new housing starts and is affecting Oregon.

      Result of States Filing Bankruptcy – There will be reductions and loses of pensions for retired workers. There will be layoffs amongst state workers. There will be defaults in part or in full on financial obligations the state cannot fulfill. The bankruptcies will roll downhill and cities and counties will start to go bankrupt. Prisons will be turning to early release and letting large numbers of inmates out early. Prisons will close and department of corrections staffs will be curtailed. Newly convicted criminals will be steered into supervised release, house arrest, and other programs which they offender will be paying for as an alternative for prison which will be reserved for violent offenders. There will still be a lot of convicts, just not a lot of people doing prison time. First responders such as police, highway patrols, and department of corrections law enforcement personnel, fire personnel, ambulances, sewer, water, and other personnel will be laid off out of necessity.

      Combined with high unemployment, rising homelessness, an awful economy, early prison release and a very low chance of getting sent to prison crime can be expected to rise significantly. There will need to be layoffs and a certain amount of jobs cut from the public sector within the states, cities and counties. Many of these people were and are Obama supporters but they will sour fast when they lose their jobs in the midst of this depression with awful prospects for work.

      Thirty-four states already cut higher education aid and twenty-five states already reduced grade school aid. Twenty-Seven states have reduced health care benefits for low-income people. Twenty-six states have hiring freezes. Twenty-two states have lowered employee’s wages. Thirteen states have announced layoffs. Federal aid to the states has already being reduced. The worst is yet to come. 2010 will bring the loss of many jobs in public sector as well as the private sector. Experts say any chance of a turn around will be best case in 2011 and possibly much later with 2010 looking bleak.

      Discussion –The bankruptcies should happen in 2010 and many of the other problems have already begun. In 2010 37 Governors face re-election and 46 states will chose their legislatures. The reality is to keep the states spending budgets up; taxes will have to be increased. When you have a lot of people out of work and a lot of failed businesses this means big tax hikes and raising taxes for those able to survive in a down economy is just going to make it harder for them to make it in the long run. Of course out of work people are short term oriented and can care less about down the road.

      Things look like the politicians are going to try and run with upside down budgets but they will run out of money and then have to make some hard choices when they are up against the wall. In a state with high unemployment, who is going to vote for a politician who says we need to pull our belts in and run with a balanced budget and a sound economic policy and this will mean spending cuts and job cuts. Now the politician who says well we need to make jobs, extend unemployment benefits, send the kids to school and college, keep the medical aid coming, and keep the spending up is going to get elected. Then when the spenders get elected what are they going to do?

      See the perfect storm is brewing and many indicators for a revolution are in place and it is like waiting for the other shoe to drop. Obama has been a sheer disappointment for many and the few remaining supporters will turn against him when they see what 2010 has in store for them

      • coal miner

        Sook Young
        The blame goes to both Republicans and Democrats
        Obama wll get the blame for it,but the real lion’s share should go to Dick Cheney and George (Scab) Bush. Remember that silly war they got us into. We are paying a price for it and it is bankrupting us.We need new leadership and end to the war, and also reckless spending.Vote for Ron Paul.I think he will make a great president and we could restore sanity.Out with the old,in with the new.Lets send these guys packing.

        • wandamurline

          What did you want Bush to do…say to the terrorists “I wish you had not flown planes into that building and killed all those people, but I guess we can live with it”. That would be like not retaliating for the Japanese bombing Pearl Harbor….then we could all be speaking in German and run by a Dictator…but, wait, we are being run by a dictator, just no one in the news media wants to admit it. We have spent more on foreign aid, reconstruction of mosques in the middle east (where is that separation of church and state?), and illegal aliens’s benefits than both of these ware cost us. And, let’s remember that Obama just declared war on Libya without any reason or congressional approval and is still outside the law as he has not stopped the bombing…what do you think that is costing our country? Your remark is absolutely ridiculous.

      • http://peronalliberty Kevin

        You couldn’t be more wrong! the states that you yourself mentioned are republican govened and controled, why is that? why is it that everyone of the stetes that are on the verge of bankrupcy democates (rymes with hipocrates) run, with there union favorittisem, sory can’t spell, (public schools), U.S. Army taught me how to type, but I can see what the hell is going on, progressives ruining our great Country. On top of it all, I was actualy born in Central Falls, R.I. back in 1955, it wasn’t a “nice little town then either”, the last time the city made national news was becuase it was the Cokecain capitol of the east coast, I and most of my relatives have moved out, tax’s are way to high, $69.00/thou!!!! if you own a regular 2 decker you are paying $4000+/yr. in property taxes! to say the least the town is overun with welfare mothers scamming the system, with monthly checks, food stamps, sec 8 housing, and what they call WIC (womens infants and children) free milk, cheese, eggs. No wonder they are going broke! oh yea not one republican in power! all democrates (rymes with hipocrates) running the show! There are more people living in R.I. than in Wyoming! probably more on welfare!

        • http://peronalliberty Kevin

          I almost forgot, the Towers that you picture are what is left of the old Casino that burned down in the 50′s, but it is in a town called Narragansett, 40 miles from Central Falls, the complete other end of the State!!

  • Lastmanstanding

    It is time for everyone, individuals and govt. on all levels. to balance the books…If not… the planet is going to do it for us.

    In fact she is moving that way already. only those who keep their wits and are preparing will come out on the other side.

  • Duif100

    It is bad when it happens to a city or town.
    It is worse when it happens to a state.
    It is a disaster when it happens to the nation.
    We need more greedy unions to accomplish total destruction faster.
    Thank you Obama for aiding in this destruction.

  • Brad

    This article reminds me what happened in my home town of Vallejo, CA. Back in 09 the city had to file for bankruptcy protection, there unfunded liabilities and pension payouts to police, fire fighters and city employee’s accounted for 75% of their annual budget. This also included salaries and so on and so forth, leaving very little to run the city itself. Yes, unions had a purpose, today they are just a paracite on society, always wanting more for less. Case in point of union members exploiting the system; a California corrections officer called in sick, he didn’t want to work the first shift. That’s O.K. in my book but, that’s right he showed up at the corrections facility for the second shift, worked 9 hr’s and got paid time and a half. You see he was on sick leave which earned him his normal pay for the day and since he went in and worked a different shift he was able to count the other shift as over time and collect 1 1/2 times more pay to include his regular sick pay for the day. That’s what your unions are doing to states and local governments, gouging the tax payer, when will these states and local goverments going to smarten up. Wisconsin has, others need to do the same, just my opinion.

  • Brad

    Isn’t California in the red to the tune of some 24 billion dollars?

    • crystal

      …and the liberals keep running up the debt in this state. We’re now looking at other states to move to.

      • Brad


        I saw the writting on the wall many year’s ago, left the state back in 88 and never looked back. Today you couldn’t pay me enough to live in California.

        • granny mae


          We too saw the writing on the wall and moved from Michigan in 1976 ! The blame for all of this goes on the shoulders of both parties and has been brewing for years. It isn’t just since Bush ! This goes way back and in truth lies with many factions the unions have had a big part in it. So has our Congress with the laws they pass and the stupid lack of forsight ! This country has been allowing our jobs and companies to go to other countries for the past 30 yeas and now all of a sudden we are crying what happened. We have had certain presidents that have relaxed the imigration laws so they could buy votes and now we are over run with illegal imigrants which we support with welfare and fod stamps and medical benefits and college benefits and so on and we wonder what happened. Our colleges are full of professors that think and teach like Bill ayers and we can’t get rid of them because they now have tenure. We have teachers that can’t be fired even though they have been found quilty of child molestation and still we pay them their wages and they sit and do nothing ! We have judges that inturpret the law instead of enforce it. All of this is going on and we sit and do nothing about it. We now have people moving to this country not to enjoy it’s freedoms but to take it over from within by insisting they be allowed to live according to their own laws and not the laws of this land. If they want to live according to their own laws then they should stay where they came from . That was the law of their land. We have come to the point where we insist that everybody should be allowed to have their own way in this country and that is dividing this country to the point of it falling and it won’t be long now ! You can argue all you want about who’s fault it is but it is all of our faults for not doing something about tis a long time ago ! We have allowed it to happen !

      • independant thinker

        Look at NW Arkansas. The economy is much better than the national economy there and Arkansas had a budget surplus last year. The one drawback is Wally World’s headquarters are there.

  • ph

    just more failure from inept govt & greedy unions. This just might be the beginning of the end of the dismal socialist agenda. Stealing from the people will always end in failure because they eventually run out of other people’s money.

  • http://charter howe

    The bad decision made by so many people is stunning. If I were to venture a guess, there was a lousy lawyer who represented these folks and as usual they only see their payoff as a road to victory. The lawyer who couldn’t see the merit in a compromise in the best interest of the taxpayers and the retirees should be disbarred and run out of town. I retired from the military and with my disability benefits added in I don’t make half as much as the average retirement salary of those public sector retirees who think they are getting cheated. When you know there is only one loaf of bread maybe only half a loaf will work. We are here to make a life not a living otherwise I would have let someone else take my position in the military to be the moving target and be eligible for food stamps. If we don’t vote out the big spenders in the Whitehouse and the Senate on 2 Nov 2012, I can tell you with absolute certainty that federal pensions will be next in the tank in less than ten years. When the people who have the money are broke everybody will be broke DUH. Its called the law of TAKE and GIVE. I don’t know about you’l, but I don’t want to live in an America that goes down the path of communism. Most people don’t know we have 70 socialist democrats in the House of Representatives and a handful in the Senate. Add to that the Hispanic Caucus and the Black Caucus which consistantly votes with the liberal socialists, it becomes clear that our great country is being ideologically raped by special interest minorities who claim their intentions are completely honorable when in actuality its a covert scheme to gain power and control and install pure marxism and that my friends cost China, Cuba, Russia and other failed communist regimes hundreds of millions of lives over the past two centuries. Think about it this way, when you watch Congress (both houses) debate, its really a bunch of lawyers fighting over the spoils that could be had from winning a meaningless argument. That is what lawyers do, they want to win irregardless of what is good for WE THE PEOPLE. You have to be brain dead to watch these clowns use their talking points to say we should not reform entitlements for example when we all know that if entitlements are not reformed, they will go away from the burden of the debt and deficit which is still not fixed. They are making arguments that will give them the vote or favor power for their party, its not about whats good for America.

    • NOWtheytellus!

      Never was howe, never was…

  • Ellen

    I’m curious what cuts they were offered and refused. The offer was probably better than the 50% cut they will now get. Greed and foolishness breed in unions. Most union workers are ignorant about what benefits are offered to non-union people, so believe they are owed these unsustainable benefits. Most union bosses are greedy and power hungry. Maybe every govt in America should follow this lead and force reasonable benefits back into the govt workplace.

  • Harvey Herring

    Since when is it only the union’s fault? If I remember correctly the city officials had to agree to the union demands. I have to pay more into my pension than my city does. I also pay thirty per cent of my health care. Our pension is strong, but would have been stronger if the city council had not voted to give twelve year pensions. So it seems that it takes both the union and the city administration to ruin their city.
    I believe unions are great until they create a monster that destroyes their company or city!

  • http://charter howe

    I see elected officials who make short range decisions basd on long term budgets a serious problem. The Gov and legislature are voted into office for two or more years and in their quest for re-election they try to stay visible and do a good job even if it means voting for unsustainable benefits and pensions in future years to garner union support. Most of these elected officials are never around to experience the outcome of their votes made in earlier years and often these future financial sustainability decisions are based on fantasy instead of reality. Who could have predicted that our country was broke and had to pay 41 cents interest on every dollar we borrow from the Chinese and that has changed the whole economic system in America because our poor economy coupled with the spending disease that Congress has had for almost a decade has forced 19 states to reach the financial breaking point. The Unions continue to lawyer up to bring lawsuits and the democrats in Congress continue to vote down all sane attempts to keep big govt on the payroll, even though WE THE PEOPLE in the private sector cannot afford it. If you want to change this disturbing way of life, vote them out on 2 Nov 2012.

    • Emoke

      Vote them out is part of the solution. It will be difficult because of the high percentage of the voters that are on the public dole and the bleeding heart do-gooders who don’t think the parasites could take care of themselves. A bigger part of the solution would be to reintroduce constitutional restraints on the Federal Government. I don’t see how that can be done incrementally.

  • Detlef Naase

    Quote of the century – Some people have the vocabulary to sum up things in a way you can understand them.This quote originated in the Czech Republic – “The danger to America is not Barack Obama but a citizenry capable of entrusting a man like him with the Presidency. It will be far easier to limit and undo the follies of an Obama presidency than to restore the necessary common sense and good judgment to a DEPRAVED ELECTORATE willing to have such a man as their president. The problem is much deeper and far more serous than Mr Obama, who is a symptom of what ails Americ. Blaming the prince of the fools should not blind anyone to the VAST CONFEDERACY of fools that made him their prince. The Republic can survive a Barack Obama, who is, after all, merely a fool. It is less likely to survive a multitude of fools such as those who made him their president.”

    • independant thinker

      Reminds me of a can wrap I have that says “never underestimate the power of stupid people in large groups”.

      • NOWtheytellus!

        Well, what do you expect after the supposedly “intelligent” president before him raped America by using our AAA credit to fight a Country for the oil alone.. Who do we trust? So enters the clown of barkers giving us words that we can understand.. It could (and would) have happened with any other corporate puppet we elected.. What we need is an end to black or white.. Demolish the mind set that only two parties is sufficient for us to decide our future.. Like they say, “Six of one, half a dozen of another”.. It’s pretty pathetic when a leader is elected purely through wealth.. I say limit this! When a leader is elected by the money that’s spent alone, the only other thing they can look forward to is abuse the absolute power for their sacrifice.

  • Patrick Killelea

    It turned out that Mr. Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Mr. Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires. “How can this be fair?” he asked of how little he pays relative to his employees. “How can this be right?”

    Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare.

    “There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”


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