By Flo Jonic
Central Falls, R.I. – The city of Central Falls is broke. The city council has voted to petition for receivership, a type of bankruptcy. The receivership petition was approved by a Superior Court judge yesterday morning.
Cuts in state aid coupled with a drop in revenues from the Wyatt Detention Center have driven the city of Central Falls into receivership. The receivership resolution, approved last night, says the budget crisis is so severe that without court intervention the city will be unable to balance its budget without bankrupting its pension system or defaulting on its obligations.
Dan Beardsley, director of the Rhode Island League of Cities and Towns says he's not surprised. State aid to cities and towns, he says, has been cut by $60 million this year and may be cut an additional $188 million in the fiscal year starting July.
"That takes its toll and you can only cut so much," Beardsley says. "You can only reduce expenditures so much. Unfortunately what's happening in Central Falls may be the forerunner of something that will take place in a number of other communities around the state."
Central Falls is running a $3 million deficit this year and over $5 million next year.