Providence mayor: City is in fiscal 'peril'

Saying Providence is in "peril," Mayor Angel Taveras on Monday called on retirees to accept pension cuts and the city's tax-exempt institutions to pay more voluntarily to help close a gaping budget deficit that could otherwise send Rhode Island's capital into bankruptcy.

The mayor used his State of the City address as a kind of warning bell - the second in less than two weeks - saying he is running out of options to address a $22.5 million shortfall for the remainder of the fiscal year.

"We stare into that black hole because some have failed to sacrifice," Taveras said, according to his prepared remarks. "Our tax-exempt institutions and our city retirees have yet to join the rest of our community in helping to save our city."

Speaking from the City Council chamber, Taveras painted a bleak picture of what cash-strapped Providence might look like this summer - a city where potholes turn into sinkholes because of further public works cuts and where the stench of garbage permeates the air because trash is picked up only every two weeks.

Taveras called annual cost-of-living payments of 5 percent and 6 percent received by about 600 public-safety retirees "unbearable and unsustainable." And he said the city's major tax-exempt hospitals and universities have "failed to partner with us" in making more financial sacrifices.

He said residents have already sacrificed through higher taxes and the slashing of services and that city employees have endured layoffs and accepted pay cuts. A year ago, the projected deficit stood at $110 million, what he described at the time - and again Monday night - as a "Category 5 hurricane."

"We cannot solve our fiscal problems without permanent, meaningful and difficult structural change," he said.

Taveras has vowed to cut pensioners' benefits one way or another. A receiver overseeing the city of Central Falls cut retirees' pensions unilaterally even before filing for bankruptcy on the city's behalf in August

Taveras also is seeking a total of $7.1 million more this year from the tax-exempts; more than half of that, or $3.75 million, is budgeted to come from Brown University.

Brown President Ruth Simmons told the campus community Saturday that the university's governing board, at its winter meeting, considered various options for increasing its contribution to the city.

The city suffered a setback on Friday when the state Supreme Court denied its request to hear an expedited appeal of a lower-court ruling preventing it from shifting retirees to Medicare coverage. That would have saved between $6 million and $8 million this year.

Taveras said earlier he respects the court's decision but that it makes the deficit problem "even more daunting."

"Rhode Island is dependent on Providence for its economic success," Taveras said in his address. "Rhode Island cannot afford for Providence to follow the path of Central Falls. I will do all I can to make sure we avoid that fate. However, without structural change, we will only delay the day of reckoning."