The City of Providence, in my home State of Rhode Island and Providence Plantations, is in dire financial trouble, as I have posted here many times before.

The City, with its large tax-exempt university base and decades-long history of lush public sector benefits, has struggled under new Mayor Angel Taveras to cover large structural budget deficits inherited from then Mayor now Congressman David Cicilline.

The City of Central Falls, RI, which filed for federal bankruptcy protection, was a precursor to what could happen without major union give-backs in a state where the unions control the legislature and the State itself faces a pension cliff.

In Providence, the situation is reaching the breaking point, as the “B” word is openly being spoken:

Rhode Island’s capital city will be in bankruptcy by June if it doesn’t get help resolving its financial crisis.

That was the dire warning from Providence Mayor Angel Taveras during a Thursday [February 2] morning news conference at City Hall. With five months left before the end of the fiscal year and the capital set to run out of cash by the start of summer, the city still faces a roughly $22.5 million deficit in its budget for this fiscal year, which ends June 30.

The budget shortfall was projected at $110 million last March, when Taveras declared a “category five” financial emergency in Providence. It was reduced after he negotiated new contracts with unions, laid off workers, cut spending and won increased state aid.

Taveras, a Democrat who took office 13 months ago, told reporters Providence could be pushed to the breaking point without sacrifices from retirees and the city’s large tax-exempt institutions, including Brown University and the hospitals.

“Our firefighters, police officers, teachers and taxpayers have all sacrificed in the last year and helped Providence avoid catastrophe,” the mayor said. “However, not everyone has sacrificed. The failure of our tax-exempts to sacrifice has left a $7.1 million hole in our budget.”

Brown University, that bastion of über-liberality, does not appear willing to part with much of its cold, hard cash.

Neither do the public retirees.  The Mayor’s State of the City speech yesterday highlighted the problem of compound-COLAs:

Nor can our retirees be successful in a failed city. Central Falls taught us that lesson. An unbearable and unsustainable burden of 5 and 6 percent compounded pension COLAs – guaranteed annual raises for retirees – causes the black hole that we face to deepen with each passing day.

These guaranteed annual raises have resulted in the absurdity of each of our top 25 retirees collecting more than $109,000 a year in a pension. In fact, the retiree who collects the highest pension retired in 1991 with a salary of $63,500 and now collects $196,000 per year. Or, put more simply, $16,400 a month. He collects more than 5 times the income of an average Providence resident. And, he collects more money from the City as a retiree than any working Providence employee.

While our city workers, teachers, police officers and firefighters are foregoing raises, many of our retirees continue to collect 5 and 6 percent compounded raises every year. Taxpayers and business owners know that guaranteed yearly raises of this magnitude – or any magnitude in these economic times – make no sense. This must stop now!

Without structural reform, in the next 10 years, our annual pension payment will grow from $58.9 million to $98.7 million – a nearly 70 percent increase.

Added to these pension costs is the promise of free health care for life to our retirees. We spend over $30 million annually on retiree health care and have an unfunded obligation of $1.5 billion in other post-employment benefits, mostly related to health care.

Mayor Taveras is trying his best.  Unlike Cicilline, who swept problems under the rug and escaped the carnage by getting elected to Congress (information on his 2012 Republican opponent here), Taveras is tackling the problems.

But there’s only so much Taveras can do, unless the universities but most importantly the retirees give back:

Our retirees need to step forward and do their part just like our active employees have already done. They can join current city workers and forego their annual raises and help save our great city. Or alternatively, they will be forced to join in our sacrifice when we fall off the edge. If we fall, our retirees will be looking at much more than a simple suspension of their raise.

Providence has been reduced to begging for mercy.  My guess is that it probably won’t get it.