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City on the fiscal brink

March 6, 2012

WOONSOCKET — As Gov. Lincoln Chafee and his fiscal advisers looked on, Mayor Leo T. Fontaine disclosed for the first time last night that the School Department’s cumulative projected deficit has ballooned to a staggering $10 million for the last two years.
Speaking in the most dire terms, Fontaine laid out a roadmap for program cuts, departmental consolidations and a supplemental tax bill to fill to gap, but he said that any plan of action must be executed very quickly because the city is fast running out of cash and won’t be able to pay its bills by the end of the month.
The mayor was sympathetic to the plight of city residents, who’ve faced a string of tax increases to compensate for dwindling state aid in recent years. But he said residents, city employees and other interested parties who’ve already made sacrifices will likely get hit again if the city is to have any chance of avoiding bankruptcy.
“I cannot understate the dire circumstances that we face here,” said the mayor. “We are all in a very, very bad situation and at this point in time we all need to be part of the solution. Looking at the magnitude of this deficit, bankruptcy is certainly on the table at this point.”
The bad news was delivered, officially, by Dina Dutremble, an interim finance director who took over recently for Stacey Busby, who is on paid leave and whom many have blamed for the fiscal chaos at the school department.
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About 75 people, including members of the School Committee, teachers, and the general public were on hand for what was billed as a work session with the council to discuss the deficit, which has been the subject of intense speculation for weeks.
Earlier in the day, members of Fontaine’s fiscal team, including Dutremble and Finance Director Thomas M. Bruce III, had met with Chafee’s staff, including Revenue Director Rosemary Booth Gallogly, to discuss the figures, and the city’s options. Two examples of the conditions the state could force on the city are already in play elsewhere, including insolvent Central Falls, which has been placed in the hands of a receiver, and East Providence, which is under the control of a state-appointed budget commission. Both have broad powers to seize control of municipal purse strings.
Addressing a small throng of reporters as the grim hour-long session in Harris Hall broke up, Chafee said the city’s situation is tenuous, but the state is not going to step in just yet. Chafee said his administration might be forced to re-evaluate that position if, by the end of the month, the city is indeed unable to pay its bills.
“The end of the month is coming fast,” the governor said.
Gallogly, in a separate interview that took place on the other side of the auditorium, sized up the situation in much the same way that Chafee did.
“Obviously we’re watching very closely to make sure action is taken to resolve the deficit and make sure that everyone’s working together,” she said.
Gallogly said the deficit is so big she doesn’t expect the city will be able to tackle the whole of it in the balance of the fiscal year, but she said, “They do need to address some of it just to keep going, cash-wise. They’ve got to do something or people are not going to get paid, and that’s not a good situation.”
The one concrete step Fontaine called for in the short term is for the city to absorb the bookkeeping functions of the school department. He said he is loath to raise taxes yet again, but a supplemental tax bill, plus a tax hike next fiscal year, are also distinct possibilities. Still, Fontaine said, even a supplemental bill is unlikely to help with cash flow, the more immediate and critical issue.
“We don’t have a lot of time to solve the problem,” said the mayor. “By the time the money comes in we’re already past our cash flow deadline.”
The $10 million deficit is the result of a $2.7 million hole last fiscal year, plus a projected $7.3 million by the end of this one on June 30, including some $4.3 million in personnel accounts alone. The total budget was about $59.3 million, but the schools are on track to spend about $66.6 million.
Council President John Ward, a CPA and the finance director for the town of Lincoln, said a big chunk of the shortfall occurred because Busby apparently credited more than $2 million in federal funds awarded for the current fiscal year to the last one. He also said he still doesn’t know whether Busby was aware of the mistake when she made it.
What is clear is that, weeks before Busby disclosed a projected deficit, last December, she was telling members of the School Committee, there would be a small surplus, according to Councilman Marc Dubois, who was chairman of the School Committee at the time. Dubois and current members of the School Committee, including Chairwoman Anita McGuire-Forcier, were on the defensive because some council members say the committee was to blame for the deficit.
None fumed with more righteous indignation than Councilman Roger G. Jalette Sr., who excoriated the school committee for continuing to carry Busby on paid leave.
“We need to have some heads roll on this thing,” said Jalette, pounding his fists on the council dais. “I’m so angry as a taxpayer right now, and I’m tired of all the bull.”
McGuire-Forcier said the committee members are only part-timers and they make decisions based on the information supplied by professionals like Busby.
“To say it’s 100 percent on our shoulders, I would have to say you’re wrong,” she told Jalette.
Dubois dittoed the sentiment. He said it wasn’t until after the school committee’s last meeting that the modest surplus Busby predicted had somehow morphed into a sizable deficit.
“We can only go by what we’re told; we can only go by what we’re seeing,” he said. “I agree Ms. Busby should be fired. She outright lied to the school committee all along.”

Comments

Supplemental property tax bill..

March 13, 2012 by Marcel (not verified), 2 years 17 weeks ago
Comment: 963

This would kill our budget at home and we could not afford to pay it. I believe the City would be best to turn over control to the State while going through bankruptcy court. Familes do it all the time and the City needs to do the same.

Woonsocket School Committee

March 7, 2012 by wiegandr (not verified), 2 years 17 weeks ago
Comment: 954

The Woonsocket School Committee. The Gang That Can't Shoot Straight.

fiscal brink

March 7, 2012 by watcherofcity (not verified), 2 years 17 weeks ago
Comment: 953

Taxpayers should be enranged. We have an alleged cpa on the city council, a fiscal manager in both the city and school depts., outside auditors we pay big money to and nobody knew what was going on? It's a systemic problem as well, ie, no internal controls to safeguard our assets and to look for fraud. We can sue the outside auditors. Leaders are inept, incompetent and should be held accountable. Talk is cheap, it's time to clean house and put competent knoledgable people in places of responsibility.

It was only a matter of time !!!!

March 7, 2012 by Jeffo46 (not verified), 2 years 18 weeks ago
Comment: 952

If the School Department had turned over their yearly budget reports over to both the Mayor and the City Council when they were asked to, maybe there would be a slim chance that the city wouldn't be in the mess that it's in now. Because of their arrogance , now us residents are going to have to suffer and this is just not fair . Maybe it would be better if the state did take over and put the city into recievership because the current adminstration is doing a lousy job running things IMO. Let the state run both the city and the School department and maybe Woonsocket will bounce back from the stupidity that has caused this mess in the first place.

Let it go under!!!!!!!!!!!!

March 6, 2012 by sinking fast (not verified), 2 years 18 weeks ago
Comment: 951

Don't buy Fontaine's lie about we're all in this together,i didn't make any mistakes but i'm constantly paying for others.If you get a supplemental don't pay it!

Fiscal situation

March 6, 2012 by gjlac131 (not verified), 2 years 18 weeks ago
Comment: 950

Can not understand how the City of Woonsocket auditors could not find out what was found out in a couple of weeks.
Can we sue them for our money back

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