East Providence on path to Solvency; Bradley Hospital gets paid

Jul 11, 2012

East Providence city government is on its way to solvency and the lessons are fairly simple: Once again, negotiation and conciliation works better than confrontation and litigation.

Under the arrangement forged by the state Budget Commission that was ushered in to scrutinize East Providence finances, the city’s largest creditor, Bradley Hospital, which provides special education services to the city, will receive all payments within 60 days. The hospital had been owed more than $4 million for services, which threatened to send the city into receivership.

Instead, a Budget Commission appointed by Governor Lincoln Chafee and led by Michael O’Keefe, a retired top state budget expert, worked with city officials to iron out the problems. The result is that both credit-rating agencies, Moody’s and Standard & Poor’s, have jumped the city’s rating. (From credit-watch status to positive for S&P and credit-watch to stable for Moody’s).

There are no tax increases, although the 15 percent property tax homestead exemption on owner-occupied dwellings will be phased out after 15 years at one percent per year. The city has also consolidated services and established a regional trash compact with Pawtucket and Central Falls.

Last fall, the city paid Bradley a $1.2 million payment that whittled the debt down to about 3.3 million. Both sides were patient and Bradley, led by hospital President Dan Wall and executives of the Lifespan chain, of which Bradley is a member, chose the negotiation path that led to the agreement without litigation. The good news for the 70 or so East Providence families that rely on the special education programs is that the services continue without interruption. “Everybody on both sides realized that this program is a real gem that needed to be saved,” said Wall in a brief interview.

A statement is scheduled for later today from the Chafee Administration.