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Council tables takeover request

May 22, 2012

WOONSOCKET — The City Council voted 6-1 last night to table a measure asking the state to appoint a budget commission to take over the city’s finances, saying it would resurrect the measure quickly if the House of Representatives fails to push forward the city’s request for a 13 percent supplemental tax bill today.
Council Vice President Daniel Gendron said he introduced the resolution only after the House Finance Committee last week tabled enabling legislation to allow the city to levy the tax bill, its last best chance to raise the money needed to operate the School Department for the rest of the fiscal year. At that point, he said, it looked like the city might be out of options.
“I guess I’m an optimistic person and hopefully they’ll be able to pull this off tomorrow and get this passed the way it should be,” Gendron said in Harris Hall.
Gendron’s “the way it should be” terminology wasn’t just empty phraseology. There was broad consensus on the council for what he meant, which was that legislators should allow the bill to pass exactly the way it’s already been approved by the Senate, with no amendments that will get it bogged down in more back-and-forth reckoning between the two chambers of the General Assembly.
It’s too late for that, said Council President John Ward, who was highly critical of the legislative delegation, without naming anyone specifically. Last week, a designee of House Speaker Gordon Fox said the only reason that the Finance Committee failed to vote the measure onto the House floor was that no member of the Woonsocket delegation, including State Reps. Lisa Baldelli-Hunt, Jon D. Brien and Robert Phillips, spoke in favor or the measure during the hearing. Baldelli-Hunt and Brien had previously expressed varying levels of disapproval for the measure, saying they doubted it would solve the city’s underlying budget problems.
After the hearing, Baldelli-Hunt was more supportive, but she thought the measure might need some tweaking in order to gain her vote, including an amendment calling for an investigation into the root cause of the cash shortfall, a projected cumulative deficit of $10 million in the Woonsocket Education Department.
“As far as the legislation goes, I hope they don’t mess it up with amendments,” Ward said at one point. “I don’t think putting this amendment will achieve anything but delay the process.”
The House Finance Committee is scheduled to reconsider the enabling legislation this afternoon.
Although the resolution before the council would not have compelled State Revenue Director Rosemary Booth Gallogly to appoint a budget commission, once such a panel is in place it would be much harder to get rid of. Gendron said the five-member commission, which usually includes three non-residents plus the mayor and city council president, could remain in place for up to five years, assuming all the decision-making powers now spread across the City Council, the School Committee and the administration of Mayor Leo T. Fontaine.
Councilman Christopher Beauchamp understands the compelling need for the city to have a safety net in place if it can’t get the supplemental tax bill passed. But until lawmakers have been given an opportunity to pass the enabling legislation, it’s better to err on the side of local control, he said.
“I think we need to give them that opportunity,” he said. “If we pass this tonight and a budget commission comes in, they’re here for good.”
If the enabling legislation passes the House unchanged, and is signed into law quickly enough by Gov. Lincoln Chafee, it is the city’s intent to use the bill as leverage to borrow $3.2 million for five weeks from Citizens Bank, just to keep money coming into city coffers in anticipation of collecting proceeds from supplemental tax bills. Finance Director Thomas Bruce said it would cost the city about $25,000 to borrow the funds for that brief period, a good deal, given the stakes involved.
Councilman Albert G. Brien cast the lone vote of dissent on the question of requesting the appointment of a budget commission. He said he would have also voted against the merits of a budget commission had the measure not been tabled. He said the only way he’d accede to the authority of such a panel is if one is forced upon the city by the state.
“I do not support a budget commission at any time,” he said. “If we opt for it voluntarily I absolutely will not support it.”
Instead of issuing a supplemental tax bill or borrowing money from a bank, Brien is advocating that the city borrow from its own pension fund. Bruce told him he still hasn’t found a lawyer with expertise in bonds that will sanction such a move, and State Auditor General Dennis Hoyle thinks it’s a bad idea, too.
Only one other city in the state is currently run by a budget commission, East Providence. The panel was created under the Fiscal Stability Act of 2010 and gives the state revenue director the power to appoint such a panel to intercede in the financial affairs of distressed communities. Among other things the panel would have the power to cut the wages and benefits of elected officials, consolidate departments, levy supplemental taxes and, if it thought that doing so was necessary, seek the imposition of a receiver.
A receiver, in turn, would have even more power, most notably the authority to petition a federal court for municipal bankruptcy. In that event, the receiver would have wide latitude to submit all sorts of budget-balancing scenarios to a bankruptcy judge for approval, including the alteration of collective bargaining agreements and pension obligations without collective bargaining.
Ward said “we’ve heard a lot of noise and chatter” suggesting that the city should “jump to receiver.” Even if he did think a receiver was necessary, which he doesn’t, the law doesn’t allow it; the proper procedure is to appoint a budget commission first.
“The only reason we’re asking for a receiver is because we’re running out of time to issue a supplemental tax bill,” he said.

Comments

Make it a one time supplemental bill.....

May 22, 2012 by Marcel (not verified), 2 years 21 weeks ago
Comment: 1323

In the beginning I supported a one-time supplemental bill but later discovered the 13% hike was here to stay for the years afterwards and not in fact just a supplemental bill. That's the insane part.
That 13% plus the 4% coming on July 1st is the highest tax increase I've ever heard of anywhere in this country. Meanwhile the State's expecting a surplus revenue of over $100 million.
The additional 13% increase in property taxes is a way to allow the City to continue as it has without any outside audit to help better run the place fiscally. With this in mind, bankruptcy seems to be the only way to go. A total 17% increase in taxes will kill the city's spirit.
The citizens of Woonsocket will need to do a complete sweep of the elected leaders this next election including state reps and school board. Why not allow the state to run the schools, that’s where the current problem arises from. Think of the money saved by eliminating the Woonsocket School Department. It's a step in the right direction while a 17% property tax increase is not.

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