R.I. court names receiver for struggling Central Falls
PROVIDENCE — A Rhode Island city facing a severe financial crisis was placed in receivership yesterday, with day-to-day management turned over to a lawyer whose tasks will include helping to balance the budget and renegotiate contracts.
Central Falls said in a petition for receivership that it faces a $3 million deficit in its $18 million budget, cannot afford its pension fund obligations, and is hobbled by revenue shortfall and cuts in state aid. The city is in “extreme fiscal stress,’’ the petition states.
Central Falls is the first Rhode Island municipality to seek receivership, said Jonathan Savage, the lawyer who was appointed receiver yesterday by Superior Court Judge Michael Silverstein.
The appointment transfers day-to-day operational control of the city to Savage, who specializes in such arrangements and says he will have the authority to recommend renegotiation of municipal contracts or tax increases.
“Everything that will go on in the city of Central Falls will ultimately need my approval and consent,’’ Savage said.
It was unclear how long the receivership will last.
The compact, square-mile city has a population of about 19,000, nearly half of whom are Hispanic, according to 2000 federal census data. About a quarter of families have an income below the poverty level. Its problems date back years.
“The pension plan is nearly broke,’’ said Joseph Larisa, a lawyer who argued in court yesterday for the receivership. “It’s really reached a breaking point where the budget cannot be balanced, whoever is in charge.’’