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Flanders fields receiver questions

April 16, 2012

WOONSOCKET — The former Supreme Court justice who has been presiding over Central Falls as receiver will be the guest speaker during a general membership meeting of the Woonsocket Taxpayer Coalition next week.
Lawyer Robert G. Flanders Jr. will speak on the subject of municipal receivership and bankruptcy, said Acting WTC President Sharon Geving. The meeting, which is open to the public, will be held April 26 at the Elks Club, 380 Social St., at 6:30 p.m.
The announcement of Flanders’ arrival comes as city residents are embroiled in a divisive debate over whether the city should seek help from an outside receiver or, perhaps, continue treading water for some time to come. Mayor Leo Fontaine and most members of the City Council are advocating a supplemental tax bill in combination with a host of other austerity measures, but it’s still unclear whether state legislators will support the plan.
“From what I understand, city residents are split right down the middle on this, fifty-fifty,” said Geving. “It’s unclear whether the legislature is going to come through, and if they don’t, the city is out of cash at the end of the month. What then?”
The WTC, a grassroots taxpayers’ rights group, has not taken an official position on whether to support the supplemental tax bill or push harder for receivership, said Geving. She said she hopes Flanders’ speech will help members make up their minds.
Before the general membership meeting is over, she said she will ask attendees for a show of hands on their preference. She said the group has about 300 members.
Proponents of the supplemental tax bill say it is the least painful of several possible scenarios the city faces for coping with a $10 million deficit in the Woonsocket School Department. Combined with cuts in programs and wages, plus some tweaking of aid already due from the state, it will enable the city to eke out the fiscal year, they say.
Moreover, proponents argue that the first thing a receiver would do is issue a supplemental tax bill, followed by whatever assortment of cuts that are needed to balance the budget.
But detractors say the city needs an outside receiver, with no political constituencies to cater to, to eliminate underlying “structural” weakness in the city’s finances that will keep pressure on tax rates for the foreseeable future, including a sizable unfunded liability in the police and firefighters pension system.
A receiver would also have a significant club to wield that the city cannot reach in order to gain concessions on wages, pensions and other contractual obligations otherwise seen as inviolable: the power to push the city into bankruptcy.
Flanders has wielded exactly that power in Central Falls, gaining a number of concessions from employees in attempts to restore that teetering city back from the financial brink. At his behest, Central Falls remains in Chapter 9 bankruptcy, which has allowed Flanders to seek judicial approval for contractual and pension adjustments presented as part of a reasonable plan to restore the city to solvency.
With a receiver in charge, all elected official are relegated to purely advisory roles. They have no say in any solvency plans, and cannot contest them in bankruptcy court unless they are represented by counsel.
An associate justice of the state Supreme Court from 1996 to 2004, Flanders is a partner with the Providence law firm of Hinckley Allen & Snyder, where he chairs the firm's municipal restructuring and business litigation practice. He also served as chairman of the state Board of Regents for Elementary and Secondary Education from 2008-2011.
He was appointed receiver of Central Falls by Governor Lincoln Chafee in 2011 under a new state law that establishes several levels of state intervention for financially struggling municipalities. Since appointing Flanders, Chafee has become, arguably, the highest ranking government detractor of municipal bankruptcy, telling legislators last week the state can no longer afford the damage another Central Falls would cause to its reputation.
As an alternative to bankruptcy for distressed communities, including Woonsocket, Pawtucket and Providence, Chafee is urging legislators to embrace his proposals for legislative reforms designed to give financially struggling communities the “tools” they need to cut cost on their own.
The legislative package contains initiatives that would abolish or reform disability pensions for public safety employees; automatic renewal of expired public safety collective bargaining agreements; and educational incentive pay for municipal police. It would also allow executive approval of school budgets and contracts; consolidation and school administrative functions; suspension of step pay increases for teachers; elimination of school bus monitors; and the suspension of transportation to parochial and private schools.

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