Disruption Index: Central Falls – Next City

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Disruption Index: Central Falls

Credit: Danni Sinisi

Over the next two weeks, Next City will unroll short profiles of 77 people, places and ideas that have changed cities this year. Together, they make up our 2012 Disruption Index. Forefront subscribers can download the Index in full as a PDF, complete with beautiful designs and graphics by Danni Sinisi. Readers who make a $75 donation to Next City will have a full-color printed copy of the Index mailed to them.

Pension payments in Central Falls, R.I. had gotten out of hand. The city simply owed way more than it could possibly pay. With few options left, in August 2011, it filed for bankruptcy protection.

But a little more than a year later, Central Falls has brushed away the cloud over its head and emerged from bankruptcy. It’s one of the fastest recoveries from municipal bankruptcy in American history, and could prove instructive to the increasing number of places in similar binds. This year, the California cities of Stockton, Mammoth Lakes and San Bernardino filed for bankruptcy while another 10 Michigan cities have taken emergency steps in that direction. In Pennsylvania, the state capital of Harrisburg continues to teeter on the edge of bankruptcy more than a year after a first petition for Chapter 9 protection failed due to political factors.

Central Falls was able to dig itself of the hole by taking strong, decisive steps. The town of about 19,000 just outside Providence moved quickly to devise a debt adjustment plan. Officials agreed to sharp pension cuts, layoffs and hikes to local taxes. Some pensioners are not happy with the plan, which cuts their pension by more than 50 percent, but officials argue that something drastic had to be done to prevent the city from falling even deeper in debt. It was a tough, unpopular move but one that bodes well for the city’s future. Central Falls had offered pensions beyond its means and as a result, was drowning in the ensuing bills. Bankruptcy was the wake-up call that reform was needed. The strong leadership shown in Central Falls reflects similar machinations happening in Rhode Island’s state capital, where Treasurer Gina Raimondo has led a landmark overhaul of the state’s strained pension system. While pension reform demands all kinds of unpleasant and unfortunate sacrifices, these municipal time bombs require quick, adept handling. In 2012, Rhode Island was the place for lessons on how to do that.

Nate Berg is a writer and journalist covering cities, architecture and urban planning. Nate’s work has been published in a wide variety of publications, including the New York Times, NPR, Wired, Metropolis, Fast Company, Dwell, Architect, the Christian Science Monitor, LA Weekly and many others. He is a former staff writer at The Atlantic Cities and was previously an assistant editor at Planetizen.

Tags: budgets2012 disruption indexbankruptcypensions