If you have been hanging around here, you would be aware of the problems of Central Falls, RI, about which I’ve been posting since March.

So it will come as no surprise that Central Falls, weighed down by unsustainable union contracts and pension costs made worse by fiscal mismanagement, has filed for federal bankruptcy protection:

The fiscal crisis that has crippled the city over the past few years reached critical mass on Monday as the state-appointed receiver filed for Chapter 9 bankruptcy protection in federal court, the first time a Rhode Island municipality has ever been declared insolvent.

Receiver Robert G. Flanders Jr. announced his decision in the second-floor City Council chambers at City Hall….

“Services have been cut to the bone,” Flanders said. “Taxes have been raised to the maximum level allowable. From the ashes of bankruptcy, Central Falls will rise again — a slimmer, sleeker city ready to stand on its own two legs as an independent municipality or to merge, marry or consolidate services with one of more of its neighbors.”

In a sign of what is to come elsewhere unless we get serious about public sector union contracts, benefits and pensions, Central Falls was forced to use the nuclear option to void the contracts:

Flanders, as part of the bankruptcy filing, voided the police, fire and municipal employee contracts and he said he will impose cuts he proposed July 19 on 141 retired police and firefighter pensions to save $2.5 million. He will also begin requiring that retirees and active employees pay 20 percent of their health-insurance coverage.

Flanders said there will be layoffs, but did not give specifics.

The union bosses and Democratic politicians who fight reform are the cruel ones, because they are pushing their members towards the same fate as the employees of Central Falls.


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