Providence, Rhode Island, where I used to work and near where I now live, is a wonderful city.  The always colorful Buddy Cianci took a down-on-its-luck former industrial blight and turned it into the crown jewel not only of Rhode Island, but of the Northeast.  I love Providence.

These opening scenes from the former television series Providence really do capture the beauty of the City:

But under Mayor David Cicilline, who last November was elected to Congress, the finances of Providence grew menacing.

Now Providence is in fiscal free fall.  You all have heard how the new Mayor, Democrat Angel Taveras, has sent termination notices to every teacher in the Providence school system (although most teachers will not actually be terminated).  The Teachers Union has brought out school children to protest the possible cuts:

http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1

Regardless of how many children protest on the streets, the cuts will be coming because the situation is so dire.

At a news conference today, Mayor Taveras revealed just how bad things are in Providence based on the report of a municipal review board.  As reported by The Providence Journal:

 Exactly two months after taking the oath of office, Mayor Angel Taveras held a press conference releasing the findings of the Municipal Finances Review Panel he commissioned immediately upon taking office. Through Executive Order, Taveras tasked the Panel with conducting a comprehensive review of the City’s current fiscal condition.

The findings of the Municipal Finances Review Panel show the true extent of Providence’s financial emergency, revealing that this fiscal year’s structural deficit is $70 million and next fiscal year’s structural deficit is $110 million. Without immediate remediation efforts, the City is expected to end this year with a deficit of as much as $29 million.

Among the details were the following:

 The City’s pension plan is severely underfunded – a result of inadequate funding in prior years, generous benefits and cost of living increases, liberal disability pension provisions and the ability to collect benefits at an early age.

The City’s annual required contributions into the pension plan are expected to increase dramatically until 2039, when the annual payment is projected at more than $210 million.

There is no easy way out of this.  Because so much of the land is owned by tax-exempt entities (e.g., Brown University, Rhode Island School of Design), there is a relatively small tax base.

The Mayor already has announce numerous non-union administrative cuts, and says he plans to seek concessions from the various city unions.  Based on the reaction to the proposed school cuts, don’t count on it happening.

I sense a state bailout in the offing.  The problem is, the state is in bad financial shape as well.

I’m not sure where the bottom is at this point.

Update:  The full report of the Municipal Finance Review Board now is available:

City of Providence – Report of Municipal Finances Review Panel http://d1.scribdassets.com/ScribdViewer.swf

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