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State intervention imminent, city's path murky

May 26, 2012

WOONSOCKET – After an eleventh-hour parliamentary maneuver in the House killed his supplementary tax plan, Mayor Leo T. Fontaine said it’s inevitable that a state budget commission will take over the city’s finances, injecting more uncertainty than ever into the city’s financial picture.
“That was the whole reason we had been doing everything we could to avoid moving in this direction,” Fontaine told The Call Friday. “As much as no one liked the prospect of a supplemental bill, including myself, it was a necessary step for us to be able to solve our problems ourselves and not have outsiders making decisions for us.”
Fontaine said the appointment of a budget commission appears to be imminent, and might even happen before the City Council meets, as scheduled, to consider a formal resolution asking for one on Sunday night. Late yesterday afternoon, during a briefing at the State House, State Revenue Director Rosemary Booth Gallogly said the state stands ready to intervene but she and Gov. Lincoln Chafee were still holding out hope that the city’s supplemental tax plan could be resurrected in the House.
“Our preference is always that elected officials make the decisions but we stand ready to step in if that’s necessary,” Gallogly said.
The revenue director said the longer the supplemental tax proposal languishes, the more the city’s financial position deteriorates.
“We hope the House reconsiders,” Chafee told reporters.
After a torturous journey to the House floor, the enabling legislation designed to furnish the city with a 13 percent supplemental tax bill looked as if it was headed for passage Thursday, with the reluctant support of the city’s legislative delegation, including State Reps. Lisa Baldelli Hunt and Jon D. Brien. Without forewarning, however, Baldelli Hunt surprised her colleagues by announcing moments before the floor vote she no longer supported the bill, making an unchallenged motion to suspend consideration of the bill.
Choking with emotion, Baldelli Hunt said she was convinced the supplemental tax bill would be too burdensome for taxpayers. She also claimed that city officials have known all along that they would be getting a budget commission whether or not House lawmakers allowed the city to levy the new taxes, statements that were quickly challenged by city officials.
“I would tell you this situation yesterday was probably one of the most disingenuous acts that I’ve ever seen in politics, and that’s saying a lot,” Fontaine told radio station WOON. “She said she was supporting it out of professional courtesy. She decided to upend the process and change her mind, again, without even the courtesy of a call that she was going to do so.”
Fontaine said it was untrue, as Baldelli Hunt had claimed, that city officials have ever been told by Gallogly that a budget commission was inevitable even if the House allowed the city to levy supplemental taxes. The mayor pointed out that Gallogly was quoted in two different newspapers on the same day as saying Baldelli Hunt’s interpretation of the facts did not jibe with hers.
“It’s just baffling,” said City Council President John F. Ward. “Switching positions, giving no warning, the statements that she made that were blatantly false.”
Larry Berman, a spokesman for House Speaker Gordon Fox, said Friday that the only way the House would resurrect the supplemental tax measure would be upon the explicit request of Baldelli Hunt.
Baldelli Hunt did not return telephone calls yesterday.
The supplemental tax bill would have cost property owners about $350 each, raising up to $6.6 million in revenue. The funds would have helped close a $10 million budget gap in the Woonsocket Education Department which, for all intents and purposes, is already out of cash for the current fiscal year.
The city had also planned to use the enabling legislation as collateral to borrow $3.2 million immediately from Citizens Bank to bring in cash to sustain the education department until revenue from supplemental tax bills begins reaching city coffers.
Finance Director Thomas M. Bruce says that some $3.3 million in state aid due at the end of this month might get the school department through its next payroll on June 1, but no one knows where the money for education will come from after that. The schools are still more than $6 million is arrears to vendors, including transportation providers, Blue Cross and others.
If there is an irony in the apparent death of the enabling legislation to forestall a hefty new dose of taxes, Bruce says this is it: It won’t. In fact, Bruce’s recommendation to the budget commission would be to “hurry up” and resurrect the supplemental tax bill before the legislature calls it quits for the 2012 session.
“Although a budget commission might be able to find some expenditure cuts, it’s not going to be enough,” said Bruce. “We have a $10 million shortfall in the education department. The last time I checked, we have to support the education department. That’s a fact.”
But Bruce and other officials say that what they worry about most with the arrival of a budget commission is having outsiders who are not accountable to a voting constituency making financial decisions for the city. Ward warns that residents are likely to see “extreme reductions in services” under a budget commission.
He says a budget commission could also decide that its powers aren’t sweeping enough to achieve the cuts needed to stabilize the city’s finances and ask the state call in a receiver. In turn a receiver would have the power to petition the city into municipal bankruptcy, a potential chopping block for retiree pensions, labor contracts and other vested interests often viewed as inviolable.
“It’s a huge amount of uncertainty,” said Ward. “It’s a game-changer, and it’s going to last a long time.”
By law, a state appointed budget commission would have five members, two of whom must be the sitting mayor and city council president. The panel would have the power to consolidate programs, cut services and trim the paychecks and benefits of elected officials. It could also call for supplemental taxes but, like the city, it would need the legislature’s approval, said Bruce.
Fontaine now sees his role as a minority member on such a panel as a foregone conclusion, but he vowed to use whatever authority he has left after a budget commission is in place to fight for the best interests of city residents.
“No matter what happens I’m going to work as hard as I possibly can and speak up as loud as I possibly can to protect the residents of the city,” he said. “We had an opportunity to avoid this situation, and we should have.”
-- With reports by Jim Baron.

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