The city of Central Falls, Rhode Island is set to announce it’s declaring bankruptcy. The city has scheduled a press conference for 10am EST this morning, to announce that it has, indeed, run out of cash.
The Providence Journal reports that Rep. James N. McLaughlin, a Democrat, reports that “‘They’re going to file for bankruptcy… It is a rush because they do not have any money.'”
The city – population 19,000 (with the now-ironic motto “The city with the bright future”) – is on the brink of a projected deficit totally $5 million, with $80 million in unfunded pension and benefits obligations. One major pension is set to run out of money by this October.
This past Friday, city leaders reported that that retired city police officers and firefighters rejected a proposal to drastically cut their pension and health benefits, with a total savings of $2.5 million. To many, that was the final nail in the bankruptcy coffin.
Rep. McLaughlin, who’s opposed to move, however, notes that, “‘All avenues have not been exhausted.'” Michael Kelly, a lawyer representing Central Falls Mayor Charles Moreau, disagrees, arguing, “Since the legislation does not give him the authority to alter union contracts and the unions won’t give him the concessions that he needs, I don’t see where he has any other choice.'” In other words, bankruptcy is coming.
Central Falls’ presumed announcement has default-watchers on edge. On the heels of this filing news, Alabama’s Jefferson County is working overtime to avert the potentially biggest municipal bankruptcy filing in U.S. history.
Margaret Bogenrief is a partner with ACM Partners, a boutique crisis management and distressed investing firm serving companies and municipalities in financial distress.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.