Central Falls, RI Files for Bankruptcy
August 1st, 2011
Central Falls Goes Belly-Up
America staved off the threat of bankruptcy last night (for the time being, at least), and it looks like a deal will get done to kick the can down the road a little further. However, not every city has the same luxuries afforded to Washington, cities like Central Falls, Rhode Island for example.
Today, it was announced that this community will file for bankruptcy, the last course of action for a town that has reached the end of the line in their deficit and spending dilemmas. This ordeal could’ve been avoided if municipal workers agreed to take a 50% pension cut to help alleviate some of the strain on the town’s finances, but the vast majority refused, which turned out to be the final nail in the coffin.
The town currently faces a $5 million deficit, as well as nearly $80 million in unfunded obligations. The bankruptcy hearing will be heard as soon as today, and will require the town to come up with a recovery plan to stave off another potential bankruptcy in the near future. Unfortunately for city workers, any bankruptcy plan will probably feature massive layoffs and the end of collective bargaining, which is necessary for a government to do to get back to fiscal sanity, especially after years of mismanagement that ultimately resulted in financial armageddon. Nobody should be surprised at this result, but rather mindful that reckless spending has its consequences, and Central Falls is the prime example of that right now.
