What Rhode Islanders Need To Know About the Crisis in Central Coventry, Part 2

For part 1, click here.

Two solutions have been put on the table for moving forward in Central Coventry, with a third in the offing.

6. The union wants the liquidation to be halted, and the Central Coventry Fire District to continue to exist, temporarily at least, under a new form governance. In a brief filed with Judge Stern, the union went as far as advocating for the Board of Directors be reduced to advisory status by judicial decree…

[T]he Court should deny the Motion to Liquidate and authorize the Special Master to develop a plan which provides for the long-term viability of the District, while preserving the public safety….Further, because the Board of Directors has demonstrated an unwillingness to work with the District’s employees, including the Union, to resolve the District’s financial problems, they should be relegated to an advisory role at best.

This theory of governance holds that the people of Central Coventry are subject to some kind of permanent executive branch of government that floats above them, which the union is integrated into and that can dismiss the elected representatives of the people in medieval-like fashion, if they become inconvenient.

Judge Stern (rightly) decided that he lacks the power sweep the board aside.

7. The union’s most current position has been to support extending the Rhode Island “fiscal stability act” to include fire-districts, which would allow a state-appointed budget commission and maybe eventually a receiver to take over the fire-district for a period of time. (The bill to do this is scheduled to be voted on by the full Senate and the House Finance Committee today). The union obviously believes that they can better negotiate with a state-appointed budget commission than with the local CCFD Board of Directors, and has claimed in legal filings that they have $1M in real concessions they are willing to accept.  The Board of Directors disputes this, characterizing the “concessions” as deferred payments. With official budget information from the district in its present state, it is difficult to get an ironclad sense of how large the final savings would be.

8. A budget commission may not be capable of bringing Central Coventry’s problems to a quick resolution. Budget commission powers are not unlimited; here is the description, from the text of the fiscal stability act, of two of the highest-level functions that a budget commission is empowered to carry out…

•”[A]mend, formulate and execute the annual municipal budget and supplemental municipal budgets of the city or town” (city or town would be defined to include fire district here),

•”[E]xercise all powers under the general laws and this chapter or any special act, any charter provision or ordinance that any elected official of the city or town may exercise”.

It is important to keep in mind here that, unlike the mayors and city councils of cities like Central Falls and Woonsocket, fire districts do not start out from a position, under the general laws of Rhode Island, of being able to tax without direct voter approval. Fire-district levies still have to go to the voters, and it should not be assumed that empaneling a budget commission automatically negates this. A budget commission should have to submit a budget it formulates to the same voters who recently rejected the others, and re-modifying the fiscal stability act to say in effect that the union is permanent while the voters can be relegated to an advisory role (at best) is not a satisfactory solution here.

This means that the final stage built into the fiscal stability act, receivership aimed at an official bankruptcy proceeding, where everything is put on the table including the entirety of existing contracts, will be a real possibility once the state steps in. And rightly or wrongly, the realities of political pressures and “financial market forces” are that it will be much easier to send a fire district into full-blown bankruptcy than sending municipal governments has been.

9. The other pathway that’s been proposed for Central Coventry’s immediate situation comes from a group called the Central Coventry Citizens Taskforce for Fire Protection, which has included participation from the current CCFD Board of Directors and state Representative Patricia Morgan.  The taskforce has developed a plan that they claim can be used to operate the fire district at significantly lower costs. (Rep. Morgan presented this plan to the House Municipal Government Committee two weeks ago).  The taskforce’s legal framework would be to replace the liquidated fire district with a new fire district in the same geographic space, though whether various liabilities of the old district would vanish as a result of a change in charter are issues that would almost certainly be decided in court.

The operations framework proposed by the taskforce combines contracted ambulance service with professional firefighters. Rep. Morgan claims a similar structure is used by the town of Bristol at a cost of $40 per person, whereas the Central Coventry fire district costs $400 per person. The union disputes that these figures involve apples-to-apples cost comparisons, and House Finance Chairman Raymond Gallison (who represents Bristol) further disputed at last week’s Finance Committee meeting that the structure of operations in Bristol is a proper analog to the model being proposed by the taskforce.

Also, in an inversion of the usual municipal-planning arguments voiced in Rhode Island, Coventry Town Council President Gary Cote testified before the House Municipal Government Committee that Central Coventry is not dense enough for anything for anything other than a full-time, unified EMS/fire department to be viable…

They are going to have on call, paid manning of two departments, that are going to be backed up by volunteers. Does this system work in Bristol? Absolutely. Five square miles, very densely populated, it works. Central Coventry: 25 square miles, in the center of a town that encompasses the largest land mass in the state of Rhode Island. 64 square miles. Does this plan work for Central Coventry? It doesn’t work for public safety, not in my opinion.

What is clear from the 2013 Municipal Finance report on fire districts is that a wide variety of structures for operating a fire and rescue department are used in Rhode Island, and different forms should not be immediately be ruled out, simply because they are different from what exists in Central Coventry now.

10. In her presentation before the House Municipal Government Committee, Rep. Morgan laid out several provisions in the charter of the proposed new fire district that its governing board would be required to abide by…

• A 4% cap on increases in the annual tax-levy.
• No grant of supplemental taxing authority.
• A 10% cap on debt.

The 4% limit matches the limit imposed on city and town governments under RI law, and is a very important number to keep in mind. In Rhode Island’s previous extreme fiscal interventions, the 4% limit on annual levy growth has been largely honored, with exceptions in Central Falls and Woonsocket taking the form of one-time-only large tax increases. The receiver in Central Falls implemented a 19% tax increase, but then drastically cut pensions so as to stay under the tax cap in future budgets. Woonsocket’s budget commission implemented a supplemental tax-increase, which was built into its future rates, but used that money mostly to pay off liabilities, while holding increases in operating costs to reasonable levels.

Significantly, both of these communities had histories of extended periods of low-levels of municipal expenditure and/or low residential tax rates that they were compensating for. One of the first jobs of a Central Coventry budget commission should be to assemble a reliable district budget history for the last decade or so, and determine whether a Central Falls/Woonsocket style one-time jump in the district’s budget is justified at this time, or whether Central Coventry has already undergone its version of a big jump over the past few years, and now needs to move immediately into the phase of restructuring costs to fit them under the tax cap.

11. Finally, there is a 3rd option available for the district, at least for the long term, and it may be the option that makes the most sense. Representative Scott Guthrie has mentioned in several public statements that a budget commission could be considered as a temporary step towards creating a town-wide fire department. Central Coventry Fire Chief Andrew Bynes, in his testimony before the House Finance committee discussed mutual aid statistics which suggest that the district regularly gives out more mutual aid than it receives, which further suggests that integrating operations across the town may be a rational step. Transition and legacy costs are obviously a bigger than usual problem here, but for various reasons, Central Coventry may have reached a size where, in some operating form, a single town department makes the most sense.

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