Central Falls, the first city in Rhode Island’s 222-year history to go bankrupt, is preparing to exit court protection after 13 months by keeping bondholders whole while raising taxes and cutting workers and pensions.
The receiver for Central Falls, the Rhode Island city that declared bankruptcy last month, proposed a five-year plan for fiscal recovery that shields bondholders from losses while cutting benefits to retirees, imposing givebacks on unions and raising property taxes.
Providence, Rhode Island’s capital and biggest city, probably will seek bankruptcy court protection to deal with a budget deficit, Robert Flanders, the state- appointed receiver for nearby Central Falls, said yesterday.
Providence was so close to running out of cash a year ago that it couldn’t pay for tires on police cars. This month, Wall Street lined up to lend to Rhode Island’s capital, shrinking its yield penalty 30 percent.
Harrisburg’s notice of a second general-obligation debt default contrasts the way distressed cities are dealt with in Pennsylvania compared with Rhode Island, according to Matt Fabian of Municipal Market Advisors.