Broke city's lawmakers: RI must pay receiver's tab

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Posted: Feb 03, 2012 5:18 PM
Broke city's lawmakers: RI must pay receiver's tab

Lawmakers representing the struggling city of Central Falls are vowing to fight attempts to make the city pay for the state-appointed receiver now in control of its finances and operations.

Democratic state Sen. Elizabeth Crowley told The Associated Press that the receiver's costs are too high and can't be paid by city residents.

"It's a distressed city and you're asking it to pay more?" she said. "Are we planning on taxing people out of their homes? Do we want to make it a ghost town?"

The state has already sent the city a bill for $1.17 million to cover costs associated with the receivership. Gov. Lincoln Chafee now wants lawmakers to approve additional funds to cover receiver Robert G. Flanders' salary and legal fees this fiscal year. The state pays the costs upfront, then bills Central Falls.

Total receivership costs are expected to reach $2.26 million by July.

Flanders filed for bankruptcy on behalf of the city last year.

Rep. James McLaughlin, D-Cumberland, said the state should pay since the receiver wasn't elected by residents. McLaughlin, whose district includes portions of Central Falls, also said that Flanders should take a pay cut. Flanders has made $30,000 per month.

"It was implemented by the state. The state should be picking up the cost," he said of the receivership.

State Revenue Director Rosemary Booth Gallogly said she sympathizes with Crowley and McLaughlin, but that the law places the responsibility on Central Falls.

She said Chafee, an independent, included in this year's budget proposal a recommendation that Central Falls be allowed to have until 2021 to pay the state back. She said it's difficult to predict the city's legal costs, but that she hopes good legal work now will mean a short _ and ultimately successful _ bankruptcy.

"I understand their point but we're following the current law," she said. "The longer that we're in bankruptcy the more this is going to cost us."

Flanders filed for bankruptcy protection on the city's behalf in August, saying it was the only way to get the city of 19,000 residents back on solid financial ground. The first state-appointed receiver, Mark Pfeiffer, blamed the city's chronic budget problems _ Central Falls began the year with a $6 million shortfall _ on "unsustainable" pension and benefits costs, expected revenue it never got from the Wyatt detention center and bad fiscal management by local officials.

Flanders, an attorney and former state Supreme Court justice, has said he is working for less than a third of his normal hourly rate, in part because his work in Central Falls precluded him from taking more lucrative work.

The lawmakers said they hope to persuade state leaders to foot more of the bill for the receiver before the city is asked to pay more.

They have the support of at least one local official.

William Benson Jr., the City Council president, who was among the elected officials who unsuccessfully challenged the constitutionality of the receivership law, notes that it was Flanders who filed for bankruptcy on the city's behalf.

"If you want to pay for the bankruptcy, get the guy who asked for the bankruptcy," he said.

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Associated Press writer Erika Niedowski contributed to this report.