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Council consensus: Taxes bad, bankruptcy worse

March 22, 2012

WOONSOCKET — A supplemental tax bill would be an unwelcome burden and a hardship to many city residents, but bankruptcy would certainly be worse.
That appears to have been the consensus among members of the City Council, who debated their options during a three-hour meeting last night.
For procedural reasons, they didn’t actually consider a supplemental tax proposal crafted by Finance Director Thomas M. Bruce, but they aired the pros and cons of supplemental taxes versus bankruptcy in anticipation of another public hearing on Monday at Woonsocket High School before taking up the measure on April 2.
Councilors spent much of the evening peppering State Revenue Director Rosemary Booth Gallogly with questions about what would happen to the city if it were to go broke.
It was the second time she and her boss, Gov. Lincoln Chafee, had attended a council meeting in recent weeks to address the subject of the city’s fiscal crisis.
“We find ourselves in now what appears to be an untenable situation,” Gallogly said at one point. “We can’t get out of this tax mess without there being shared sacrifice. Unfortunately, there are no easy answers.”
It was a standing room only crowd in Harris Hall last night, with perhaps 125 older residents, city employees and teachers in attendance. But for the most part, it was all council all the time, as members took turns voicing their views not just on the issue of insolvency, but on the causes and cures of the city’s financial woes. No comments were allowed from spectators, but some managed to get their two cents in anyway by steadfastly holding up hand-printed signs as members of the council spoke.
“No more taxes. Spend less, like the rest of us,” one said. “No more taxes, we’re mad as hell,” said another. Some passed out bumper stickers with the slogan, “It’s the spending, stupid.”
As explained by Bruce, the finance director, the city’s immediate dilemma is less about a $10 million deficit in the School Department, but more a looming cash crunch that could choke the city into insolvency by the first week of April. Gallogly said the state stands ready to help the city ease through that period by fast-tracking some $4 million in state school construction aid to the city on March 30, about four weeks earlier than normal.
Winning a round of applause, Chafee urged spectators to call legislators and ask them to support his proposals for financial reforms for distressed communities like Woonsocket, as well as an increase in the meals tax to finance new aid for schools.
But Bruce said the city needs to step in with a supplemental tax bill that would, in effect, make the net one-year increase in taxes 17.16 percent, including some 13 percent from a so-called fifth-quarter, supplemental bill. Though the final figures could be tweaked a bit, the supplemental rates for homes could be $3.13 per thousand, motor vehicles, $5.81. The measure is expected to raise at least $4.3 million in new revenue, but the city needs cash so fast it can’t wait for the tax revenue to come in; the city must borrow a similar amount from a bank immediately in anticipation of collecting the taxes.
The School Department currently has a ledger of unpaid vendor bills of roughly $5 million, and it’s growing, said Bruce. Some of those vendors are so strapped for cash owed to them by the city that they’ve laid off workers, he said.
“They need to get paid,” he said. “They are at risk of shutting down services to the school department.”
In a comment typical of those that came from the City Council, Councilman Robert Moreau said constituents have besieged him with pleas not to raise his taxes.
“I can’t afford another dime,” they say, according to Moreau. “Why can’t we just go bankrupt?”
But Moreau said that going bankrupt doesn’t mean taxpayers won’t see a supplemental tax bill. More likely, he said, they’ll see that and worse, only it won’t be the City Council doing it. It will be someone else – a court-appointed receiver, whose only concern is the bottom line.
“Somebody else is going to come in and possibly make it a whole lot worse,” he said.
Gallogly said the scenario might go something like this: In bankruptcy, a court-appointed receiver would have power that supersedes that of all sitting officials. That individual would have the authority to unilaterally levy new taxes, cut pensions, break existing contracts and impose any other cost-reduction measures deemed to be part of a reasonable debt elimination plan by a bankruptcy judge.
In Central Falls, the only other city to go into bankruptcy under a new law, some pensions were cut practically in half. City residents also faced a supplemental tax bill and significant public service cuts.
“It was not a pleasant experience,” she said. “But when the state intervenes it will do whatever is necessary to get the fiscal house in order.”
Mayor Fontaine says he couldn’t imagine what Woonsocket would be like if it were forced to close the Harris Library, the Museum of Work and Culture, or the Senior Center. Those things are important to city residents and elected officials, but a receiver might see them with a cooler, mathematical eye, he said.
“They may look at it as a matter of balancing the books,” he said.

Comments

Tax is both a burden and a

March 26, 2012 by joliver (not verified), 2 years 3 weeks ago
Comment: 1043

Tax is both a burden and a benefit for society. It burdens people to pay for it and in return, an improvement of the society. This supplemental tax bill seems to be a great burden for many people, and many think that this will worsen their economic status and bankruptcy, but how many of these people had read the complete copy of this bill? It is too early to complain in my opinion.

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Mayor Fontaine says he

March 24, 2012 by darktalon1974 (not verified), 2 years 3 weeks ago
Comment: 1032

Mayor Fontaine says he couldn’t imagine what Woonsocket would be like if it were forced to close the Harris Library, the Museum of Work and Culture, or the Senior Center. Those things are important to city residents and elected officials, but a receiver might see them with a cooler, mathematical eye, he said.
“They may look at it as a matter of balancing the books,” he said.

I hate to say it, but that is exactly what is needed!! The books have to be balanced regardless of people loosing a few extra's like the library and a museum. That is what real people do in real life financial crisis. They cut back on the things that make life a little more pleasant... cable tv, cell phones, etc. The taxpayers in Woonsocket are already over-burdened. It is time for hard measures to be taken and serious action to be had. A few years of toughness is just what is needed to set things straight for good while breaking the spend, tax, and delay to another day budgets we have had in the last few years. Time to get the budgets out of the hands of those that created these problems and continue to do nothing to seriously correct them.

Mayor, city counsel, administrators, you've had your chance and you've failed. I'll take my chances with an impartial court.

Bankruptcy

March 24, 2012 by Freedom over free stuff (not verified), 2 years 3 weeks ago
Comment: 1030

As a city resident I would welcome bankruptcy it's the only way our financial problems will get solved. Our politicians don't have have the guts or the morals to do the right thing and make those difficult cuts that need to be done. More taxes doesn't solve the problem it actually makes it worse. We have a disease in this state and in this country called "Progressive Liberalism" and until more people realize it and stop voting for a candidate just because there is a "D" after their name things will get much worse. I'm not say it's just the Democrats there are some progressive Republicans too. Not nearly as many though and not to the extreme they are. I was a life long Democrat until a few years ago so I have hope that other people can do as I did and re-educate yourself to find the truth and not believe the mainstream media propaganda. I can just see it now when it does get real bad many good democratic people will be the first to cry out and complain "Why didn't anybody do anything!" My response will be, "We tried but you wouldn't let us"

Bankruptcy is the only salvation

March 22, 2012 by ronaldbernier (not verified), 2 years 4 weeks ago
Comment: 1010

Our city councilors don't want Woonsocket to file for bankruptcy because they and the Mayor will be the first ones to be eliminated when a receiver comes in to the city. Yes, bankruptcy will be painful, but it will give a chance for a clean sweep. It will help us to eliminate the waste in this city. The City Council's proposal for a supplemental tax is nothing more than a bandaid that is designed to bleed the tax paying citizens and prolong the inevitable. I no longer trust the City Council and Mayor to do what is right for the City. They may do what is right for the unions, but they are not worried about the rest of us who have to pay the bills. We have one city councilor who was supposed to be looking out for our best interest when he was on the School Committee Finance Oversight sub-committee. Millions of our tax dollars were wasted and he did nothing about it. Then, before it all came out he managed to get himself elected to the City Council. He didn't watch out for the taxpayers while on the School Committee, how can you possibly think he will watch out for us on the City Council. We need to let Woonsocket go into bankruptcy and start fresh. This is the only way we can get out of this mess that our politicians have created for us.

I fully agree.

March 24, 2012 by darktalon1974 (not verified), 2 years 3 weeks ago
Comment: 1033

I fully agree.

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