The Rhode Island appointed receiver in Central Falls and public-sector unions for the insolvent city on Wednesday inked new contracts outside of bankruptcy proceedings that were described as critical in helping return the municipality to fiscal health.
State receiver Robert G. Flanders Jr. and labor union leaders stood together at City Hall to announce the collective-bargaining agreements, which reflect deep concessions that will save the city a little over $1 million in the current fiscal year.
"This is a big step to returning the city to normalcy," Flanders said. "It's a tremendous relief because absent agreement we would have had to duke this out in bankruptcy court."
While the new five-year contracts include annual pay hikes, they also include "tremendous" savings derived from health benefit and pension cuts, according to Joseph Whelan, one of the lead negotiators for the receiver's office. There will also be significant reductions in overtime through a consolidation of fire, police and dispatch service; outsourcing of those services, which had been a possibility, will not be necessary.
Under the agreements, there also will be no additional layoffs.
Flanders filed for bankruptcy in August on behalf of Central Falls _ which at the start of the current fiscal year faced an unfunded pension and benefits liability of $80 million and a deficit of over $6 million.
Soon after, he laid out a financial recovery plan that emphasized pared expenses, increased taxes and drastically reduced pensions. He voided union member contracts as part of that plan but has been trying to reach agreement with police, firefighters and city employees so the changes did not have to be imposed unilaterally.
Negotiations with retirees _ some of whose pensions have been slashed by more than 50 percent _ are continuing. Flanders said he is encouraged by "great progress" made on that front.
Matthew McGowan, an attorney representing retirees, told The Associated Press those talks have been "positive" but declined to say whether he's hopeful an agreement can be reached. He said in a court filing this month that the city doesn't meet the requirements for bankruptcy protection because it didn't undertake "good faith" negotiations with the retirees ahead of time, as required. Legal arguments on that front are due Monday.
The new contracts were described Wednesday by union leaders as tough to swallow, but were nevertheless approved overwhelmingly. The union representing city workers, Council 94, approved the contract 23-0. The police and fire unions approved their contracts by votes of 17-1 and 28-1, respectively.
"Every member gave up something to make this work," said Lt. Daniel Barzykowski, president of the local Fraternal Order of Police union. In addition to health care benefit reductions and pension changes, he said members had given up some vacation time and clothing allowances.
He said his union's top priority was ensuring that none of the new aspects of the contract jeopardized public safety.
J. Michael Downey, head of Council 94, predicted the concessions agreed to by his membership _ including in health care, work hours, sick leave and time off _ are "going to be remembered" during better economic times.
Gov. Lincoln Chafee said the new contracts were signed on Wednesday morning.
Flanders had initially hoped Central Falls would emerge from bankruptcy proceedings by the end of the year, but he said that timetable appears overly optimistic. It may take a few months longer, he said.