Mayor: 'Bankruptcy Is On The Table'

The mayor warns of deep cuts, supplemental tax bills, and possible bankruptcy to fill a $10 million hole.

The Woonsocket Education Department is facing a $7.3 million budget shortfall, and the city could run out of cash to pay vendors and employees in a few weeks’ time, Mayor Leo Fontaine announced Monday night.

"I cannot overstate the dire circumstances we face here," he told the City Council. "Obviously this number is devastating ... Bankruptcy certainly is on the table at this point."

The red ink means the state may have to take over running Woonsocket, as happened in Central Falls last year, according to Fontaine. He noted the city is actually looking at a larger deficit than $7.3 million, because the city is also stuck with $2.7 million from last year's school department shortfall. "We're looking at a $10 million hole," he said. “There are questions as to whether the state is going to have to come in and take over."

The numbers also raise the likelihood of deep cuts to city services, as well as a property tax increase. "The people of this city are already taxed dramatically," Fontaine said. "Everyone cringes when they hear the words 'supplemental tax,' but they cringe more when they hear 'bankruptcy.' "

Among those hearing the mayor's message: Gov. Lincoln Chafee, who arrived at the meeting with a state police escort and took a seat in the back of the room. He took the floor only briefly to assure city officials he would work to help minimize the financial impact on local taxpayers.

"We want to avoid more property taxes on your businesses and your people," the governor said.

Speaking with reporters in the hallway, Chafee pointed the finger at his predecessor, Gov. Donald Carcieri, who slashed state funds to municipalities and local school departments. "The previous administration cut $195 million to all the cities and towns in our state," Chafee said. "This is not just a Woonsocket problem. It's a Providence problem, a Pawtucket problem, a West Warwick problem."

Chafee labeled those cities "the Big Four," meaning all of them face the possibility of bankruptcy and state takeover. "We're looking at a real crisis here," he said. 

The governor also touted his proposed tax increase on restaurant meals — from 8 percent to 10 percent — as one way out of the problem. "Those funds would go to helping cities and towns," he said. "I've stepped up."

City officials and city residents have been known they would be facing yet another school department deficit this year, but until now they had no idea how big it would be. For much of 2011, school department business manager Stacy Busby as well as the former school superintendent claimed there would be no shortfall this year, and that there might even be a small surplus. Those rosy forecasts ended in December, when auditors presented a report showing another spending deficit loomed.

Shortly after that the city appointed Dina DuTremble, a retired business manager, to determine how big this year's deficit would be. She has been assisted by Tom Bruce, the city finance director, new Superintendent of Schools Giovanna Donoyan, and finance professionals from the state. They presented their findings publicly last night.

A schools deficit caused a city budget nightmare last year, too. In March Woonsocket borrowed $11.5 million to cover the shortfall, and Moody's Investors Service and Fitch Ratings both downgraded the city's bond rating. Fontaine avoided bankruptcy last year by negotiating concessions from unions and drawing up a five-year plan to stabilize city finances.

At last night's meeting, there were vocal attacks on Busby, who is now on leave, and other school officials who failed to report that another deficit was coming.

"The person who should have made us aware is on leave right now, being paid with taxpayer dollars," said City Council member Roger Jalette. "I don't want to see anyone else taking time off for 'stress relief.' I want to see some heads roll."

"How in the world did we get this far behind, with no one aware of it," Fontaine added.

"Mr. Jalette, I agree with you," responded School Committee chair Anita McGuire Forcier. "But we are part-time. We have to rely on the numbers we're given."

McGuire Forcier also charged the state shares responsibility for the shortfall because of cuts in funding to local schools. "With another $8 million a year, we would not be in this mess," she said. "We've cut music. We've cut sports. We've taken so much away from our children. They need to fund our schools properly. The state may not like us because we're poor, but we have a right to exist."

Before the meeting ended, several citizens rose to express their concerns.

"For the last couple of years we've been worried, and tonight those worries became fears," said Sharon Gevins. "All I can ask is, consider the taxpayers."

"When you hired these people, did they just crawl out of a Dumpster and say they'd like a job?" asked Charles Souders, referring to Busby and other school department employees.

Susan Tawlina urged city officials to embrace bankruptcy as a way to avoid slashing the school budget. "We need to tell the state to take over, like they did in Central Falls," she said. "They didn't lose sports programs. They didn't lose music programs."

JB March 09, 2012 at 10:47 PM
To everyone who is out for Ms Busby's head on a platter, and is upset about her collecting pay while out on stress leave. Perhaps you should consider speaking to our School Committee Members regarding the opportunity Ms. Busby had for another job? Yes - she had another job all sewn up, when a few members of our esteemed School Committee called the new school department she was going to and ruined it for her. So........ if you have a problem with continuing her pay while she is on stress leave, you can thank the School Committee for that one! Like her or hate her, Ms Busby was leaving on her own accord, but for some reason it seemed like the better option to keep her around as a punching bag. I personally don't have an opinion of her one way or another, but I assure you, she is far from our only issue. How about reducing the number of low income households in Woonsocket? We are WAY over our required percentage, and most of these low income households have multiple children. The few homeowners that are still surviving in this city are paying for too many children in schools. We need to move these low income residents to a community with less of a percentage than Woonsocket has.
Novan for Life March 09, 2012 at 10:49 PM
This is a time for leadership not finger pointing, from what i'm seeing the city and school department are working together to solve the problem which none of us have a solution to or have mentioned at any city council meeting so let them deal with it and we live our lives to the fullest
JB March 09, 2012 at 10:52 PM
Chorus - you're on the right track here. The additional issue is that the state is mandating what is required of each school for each child etc. The requirements that they are mandating is over the budget allotted to the schools. So either they run a deficit or they don't meet their mandates. I'm not saying that there is not room for improvement. Just that there is always more to the story.
Steve March 10, 2012 at 12:00 AM
Robert, funny, you seem to forget some of your previous posts on your voting habits as shown in your post dated 2/9/2012 on the topic of : WED Likely Headed for Another Deficit. Your quote: Well still hope speak for yourself i did not vote any of these so called clowns into office i didn't even vote because i felt sick to my stomache about our choice of candidates So much for your voting in our local elections huh?
Steve March 10, 2012 at 12:10 AM
The time for leadership is over. Our local government will all be out of a job in the next month. The city has run out of money, and has no way of raising enough money to pay the creditors and bill collectors in time to avoid bankruptcy. The city has no other option than to go into bankruptcy and deal with the consequences. It's over, we will be dealing with an overseer (lack of any better term), the same as Central Falls, from this point forward and its not going to be pretty. Get ready for some hefty tax bills within the next few months......
RBeau March 10, 2012 at 02:42 AM
Robert, I believe the 12 Million youre talking about was the deficit bond that the city took out, but that was not the city's alone. Previous stories state that more than two thirds of even that was to cover SCHOOL Deficits. So nice try, but i think the fact is more like $22 million in debt, $18 Million from Schools $ 4 million for the city...Big Difference. Maybe we can ask Mr Dubois how the "Mrs GODSEND Busby " accounted for that or Maybe Elly Nadeau can explain how Gerardi ..the Superintendent that she gave an "A+...best we ever had" rating to could have let them get into that mess.... Read the minutes of their meetings. Maybe the Council should issue subpoenas to all of them including Majwewski who apparently negotiated the dirty contract along with Nadeau and have them answer some questions under oath !!
give me a break March 10, 2012 at 12:41 PM
yes yes go into bankruptcy is the only thing to do. you can't bleed the taxpayer anymore. packing me bags.
Steve March 10, 2012 at 08:14 PM
@Robert, kind of sums it all up huh? http://www.anchorrising.com/barnacles/013992.html
MassRes22 March 10, 2012 at 09:49 PM
Woonsocket should eliminate the Homestead Exemption. Let the citizens pay there fair share. On MyWoonsocket.com, there was an article that states that Woonsocket has the second lowest tax rate in the State. Only Central Falls is lower and they do not pay for their School department.
dave March 10, 2012 at 11:13 PM
Meesh March 10, 2012 at 11:32 PM
Not every property qualifies for the homestead exemption. Hence Woonsocket does not have the second lowest tax rate in the state. http://www.muni-info.ri.gov/finances/taxrates.php
MassRes22 March 10, 2012 at 11:33 PM
MassRes22 March 10, 2012 at 11:35 PM
MassRes22 March 10, 2012 at 11:48 PM
Doesn't the Homestead Exemption discriminate against Businesses???
Memere March 11, 2012 at 02:38 PM
Your information is definitely wrong. We do not have the second lowest tax rate in the state. Unfortunately we do have a lot of people in this city who do not own homes and so do not pay taxes. The time for free give-a-ways is over. This needs to stop. We the tax payers cannot afford any more!!!!! And No, the Unions are not to blame, the elected officials and those at the head of the Education Department are. If you don't have the money, STOP SPENDING. Why was the city not notified a long time ago that the schools were running out of money? Why did they ever let it get this bad? Appears to me that someone at the top was not doing their job. And now we all have to suffer for it.
Novan for Life March 11, 2012 at 02:58 PM
so who's fault is it in your opinion i'm lost by your comment
Govstench March 11, 2012 at 03:04 PM
The public unions are also guilty for much of this with their coercive bargaining practices and creating laws to force binding arbitration and perpetual contracts which tie the hands of local government. Now with the bond rating agencies taking hard looks at what is going on in this state, further downgrades of municipal and state bonds will continue. Where the public unions have miscalculated is what the taxpayers are able to pay. When the additional stress of supplemental tax increases are applied to the taxpayer, the bond rating agencies count that against a favorable rating. Requests for additional borrowing through bonds also contributes to that stress with higher taxes. It comes down to the unions vs. the taxpayers - the taxpayers will prevail in the end.
Govstench March 11, 2012 at 03:08 PM
This city needs to go through a structured reorganization and get their books balanced. Some services will need to be cut and the duplicity in government will need to be consolidated. Perhaps consolidating the finance departments of the school department into the city will help keep the schools on target with their budget, which seems to be where these problems keep coming from. The receiver in Central Falls is already doing this. Another area to consider is that taxpayers have to realize that it is too expensive to maintain exclusive control over services and consolidation with other municipalities is necessary to make them more affordable. Retirees may need to accept cuts in their benefits to fill in the hole. It is far better to accept a haircut to being decapitated. Perhaps the overall answer is to have the healthcare and pension benefits administered by the state as the local municipalities lack the financial discipline to properly run them. The problems happening in Woonsocket are shared by many other municipalities across this state and reforms need to be implemented now. The time for talking and negotiating is over.
Novan for Life March 11, 2012 at 03:13 PM
So wait a minute this is Dr.Donoyan's fault now, i would've said yes but she isn't the problem it's the people that the taxpayers voted in to office that have caused this. for example The school committee a bunch of idiots who couldn't find there way out of a napsack,the MAYOR for not lobbying early and hard enough for more money for the city, The city council well they speak for themselves just ask Mr.Dubois
The Chorus March 12, 2012 at 11:40 AM
Robert, the 'taxpayers' don't elect anyone. You need not be a taxpayer to vote.
Novan for Life March 12, 2012 at 06:40 PM
no you just have to register not just be a taxpayer
The Chorus March 12, 2012 at 06:45 PM
robert lamarre jr (Sunday March 11, 11:13 AM): "So wait a minute this is Dr.Donoyan's fault now, i would've said yes but she isn't the problem it's the people that the taxpayers voted in to office that have caused this."
Lavergne March 13, 2012 at 12:05 AM
Bottom line, it's Stacy Busby's fault. She is not qualified to do the job. All she did was lie to everyone who asked her for figures. Doesn't take a brain surgeon to figure that out. BUT, WHAT HAS THE SCHOOL COMMITTEE DONE for the past 3 months since this all came out??? ABSOLUTELY NOTHING. NO ONE HAS ANY FORTITUDE TO MAKE THE NECESSARY MOVES. This is the problem in Woonsocket...everyone complains, calls the talk shows, voice their opinions, and it falls on deaf ears, just like our state reps...what have they done to change the laws? ABSOLUTELY NOTHING!! I hear Jon Brien on WNRI every Friday morning...what has he done?? ABSOLUTELY NOTHING. Where is Lisa Baldelli is all of this?? ABSOLUTELY NO WHERE !! So, taxpayers have to stick together because the school committee, the superintendent and their lawyer Ackerman, are AFRAID TO FIRE BUSBY. And we pay these people? It's disgusting because no one is doing anything. So, when we get an additional tax bill, let's mail it to Stacy Busby, or Dr. Geradi in Maynard, Mass. alias Doctor Goober!!
angrybird March 13, 2012 at 01:05 PM
so my child might be thrown out of school as of april due to no funds, but yet if you ride by the village on cumberland street and its being remodeled? keep on taking from the tax payer's but keep giving the bums that refuse to work, refuse to go to school, refuse to do anything a free ride. free medical, free food, free housing........i have to pay for trash removal and if i dont recycle i get a fine. go threw the projects and see the overflowing dumpsters with NO recycling bins.......... maybe i should go to NRI and say i hear voices so i can add to the percentage of people that are on SSI that DONT NEED to be ! just yesterday i was at a gas station, guy pulls up with his brand new mercedes and uses a ebt card for his milk...... what the hell is going on!!!?????
Lavergne March 14, 2012 at 12:52 AM
Maybe all the people on welfare can donate their EBT cards since they use all of the city's services and pay nothing back. But they don't give back, they just take and take and take. I have never seen or heard of welfare mothers caring about the city. They only care about the entitlements they receive. Since the taxpayers pay for all their services, taxpayers deserve free food cards, free milk, free cellphones, free medical, free taxi rides, free special busing. and so on....ISN'T IT ABOUT TIME SOMETHING IS DONE ABOUT ALL THESE FREEBIES? WHERE ARE OUR STATE REPS on WELFARE REFORM? Our reps don't care about the little taxpayers....only the power they think they have... Are they waiting for all the mothers to have 12 kids each? and then finally do something? Pretty soon, Woonsocket is going to end up being one big "CHUCK E CHEESE".
Jerry March 14, 2012 at 12:59 AM
I agree, how about being behind a school bus for over 5 minutes while the driver has to knock on the door to get the kid, how pathetic, or when the mom is out on the sidewalk in her printed pj's smoking with the kids waiting for the bus. No values in life..just progams..
Russell Archambault May 10, 2012 at 10:01 PM
CHRIS; hunt working on street lights, all she has to do is ask the mayor on savings so far.
Russell Archambault May 10, 2012 at 10:13 PM
DAVID T; solution? why would young family's who both wife and husband work to do well for themselves and for their children want to live in woonsocket? So they can send their kids to public system? I hear all the time from people who have just arrived in this city and get on the welfare system that they dont even think the woonsocket school system is any good. Try to absorb that one!! Pretty sad
Russell Archambault May 10, 2012 at 10:21 PM
SANCHEZ; I would suggest we stop donating money or food to the so called hungry, and better start saving it for one's self. At that point food will not be resold, thrown away, and actually be eaten ! WAS ONLY A SUGGESTION,although not politically correct
Russell Archambault May 10, 2012 at 10:27 PM
STEVE; I agree with you on everything except on the rents.rents are realy not been increased in this city except on the HUD side. private landlords are afraid to raise because they dont want to loose any more tenants who actually pay.


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