Bankruptcy won’t be recommended for Providence by report

WHILE PROVIDENCE IS NOT ALONE among similar New England cities in having a significant unfunded pension liability, the overhang is larger than any other city in the comparison set. / COURTESY CITY OF PROVIDENCE
WHILE PROVIDENCE IS NOT ALONE among similar New England cities in having a significant unfunded pension liability, the overhang is larger than any other city in the comparison set. / COURTESY CITY OF PROVIDENCE

PROVIDENCE – Bankruptcy in Providence is not an option, says National Resource Network Executive Director David Eichenthal, whose organization is tasked with coming up with ideas to help the city fix its financial problems.
Eichenthal on Wednesday spoke with reporters about a report released this week by his organization, which details long- and short-term issues involving the city’s finances. The report, a product of a $225,000 grant awarded to Providence by the White House, the Rhode Island Foundation and the Providence Foundation, reaffirms a number of troubling trends seen in the city’s budget, including a structural deficit that unabated could exceed $37 million by 2026.
NRN is expected to release a second installment of the report next week, and it is slated to include ideas about how the city might solve some of its problems. Eichenthal wouldn’t discuss any of the proposed solutions in detail, but he did say bankruptcy is not an option.
“When people told me that folks were actively talking about bankruptcy in Providence and I read the assessment report that we did on the city … I just didn’t understand why that was a part of the conversation,” he said. “It’s not going to be easy … but I think there’s a path.”
NRN is a byproduct of President Barack Obama’s Strong Cities, Strong Communities initiative launched in 2011. Its report on Providence finances shows, in basic terms, the city’s expenses each year growing at a faster rate than recurring revenue. The widening gap is fueled largely by imbalances in its pension system, growing health care costs and cuts in state aid, according to the report.
The specter of Providence filing for bankruptcy has been entertained by people in the community who say it could allow the city to curb expenses by negotiating reductions with unions and restructure its debt.
Mayor Jorge O. Elorza, who’s expected to deliver his fiscal 2017 budget proposal in the next couple weeks, told WPRI-TV CBS 12 last week that “everything has to be on the table,” when considering fixes to the city’s finances. But Eichenthal is adamant bankruptcy will not be a recommendation coming from his team.
“I’ve never told anybody that bankruptcy should be an option,” he said pointedly. “I think there are enormous downsides for a city going into bankruptcy that are real and perceived in terms of ability to access credit, but also in terms of ability to speak to their own capacity to address problems. … I don’t think we’re looking at Providence as a problem that can’t be solved.”

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