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RI takes over finances of 3rd struggling city

By Erika Niedowski
Associated Press / May 29, 2012
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PROVIDENCE, R.I.—Rhode Island on Tuesday took over the finances of a third struggling municipality with the appointment of a budget commission in Woonsocket, where the school department is facing a $10 million deficit and the city is quickly running out of cash.

Gov. Lincoln Chafee said his administration had appointed three members to a panel that will oversee the city's finances.

The state, which has the country's second highest unemployment rate, took over the city of Central Falls in 2010, and a receiver filed for bankruptcy last year. East Providence also has a budget commission, which was announced by Chafee last year.

State Revenue Director Rosemary Booth Gallogly said Tuesday that the Woonsocket commission can request an advance on $3.2 million in state education aid and will push for passage of a supplemental property tax that failed to win approval in the General Assembly last week.

Gallogly said that even if the 13 percent supplemental tax goes through, Woonsocket officials "will still have a very tough job in front of them."

"The supplemental is still critical," she said.

The state House of Representatives had been expected to vote last week on the extra tax. But the bill was sent back to the Finance Committee at the urging of state Rep. Lisa Baldelli-Hunt, who said it would be "disastrous" for residents.

Woonsocket officials were expecting a takeover of the city's finances after the tax failed to win a vote. The City Council voted 5-2 on Sunday to ask that a commission be appointed.

The three commission members appointed by Chafee are Peder Schaefer, associate director of the Rhode Island League of Cities and Towns and a former state budget analyst; Dina Dutremble, who has been advising Woonsocket on its school system's finances; and William Sequino, town manager of East Greenwich.

Woonsocket Mayor Leo Fontaine and City Council President John Ward are also de facto members of the commission.

Gallogly said that budget commissions -- because they hold public meetings and include local leaders -- provide "a much more transparent process" than a receivership, a more serious level of state oversight.

"It keeps democracy working," she said. "It's the preferred method."

Chafee said in a statement that state intervention is never the preferred course but that he hoped the commission would help address structural problems in the city's budget and stabilize its finances.

Fontaine described the appointment of the commission as a disappointment but not a surprise. He said the step was all but inevitable after the supplemental tax -- a key part of the city's recovery plan -- failed to get the green light from legislators.

"Sometimes you need to take the bitter medicine to be able to get yourself well," he said.

Gallogly said the commission's first meeting is set for Friday.

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Associated Press Writer David Klepper contributed to this report.

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