Providence officials consider bankruptcy

The very perilous budget situation in Rhode Island's biggest city just went from bad to possibly bankrupt. Officials in the hard-pressed city that's facing a $110 million deficit admitted to a local reporter that bankruptcy has become a real option. That's because at best new Mayor Angel Taveras has been able to trim the deficit down to $70 million with his proposed budget. To make the rest of the budget work he's relying on some $60 million in taxes and savings that are out of his control, including $12 million in labor concessions he hopes to negotiate with city unions.

Providence's predicament, according to a recent City Council report, is the result in part of previous Mayor David Cicilline's budgetary maneuvers and one-shots over the last two years. To close the city's operating deficit without raising taxes or cutting services steeply he used money from a fund dedicated to paying off the city's debt and he borrowed some $40 million, with the city's fire houses as collateral. Providence's ability to continue using those gimmicks, however, has virtually ended after Moody's Investors Service and Fitch Ratings downgraded the city's bond ratings by two notches earlier this year. Cicilline went on to win election to the House of Representatives and Taveras assumed the mayor's office this year. He's since admitted that the city's budget situation is much worse than he thought when he ran for office last November.

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Providence officials consider bankruptcy

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