Central Falls, R.I. is declaring bankruptcy and claims “the current situation is dire,” according to state officials.
“Despite its proud past, the reality of the present is that Central Falls is no longer a boom town,” Governor Lincoln Chafee said, according to the Boston Globe. “The city has for years had liabilities outweighing its means.”
This will be the first city in Rhode Island to declare bankruptcy. The petition has been filed with the US Bankruptcy Court in Boston.
Robert G. Flanders, the city receiver, said that officials have revoked the contracts of police, firefighters, and municipal workers. The state also plans to ask unions to cut labor costs.
City pensioners are expected to see up to a 50 percent cut in their next pension check as a result of the bankruptcy, according to Flanders.
The city put its self under receivership, the municipal equivalent of bankruptcy, last year in hopes of fixing its financial woes, but it was to no avail. The city has been suffering for a while now, with no plausible way out.
The Boston Globe reports that the city would have built up a deficit of $5.6 million by June 30, 2012, with revenues at about $16.4 million and expenses at $22 million, if they hadn’t started making changes.