Friday, May 21, 2010

Straw in the Wind?

Small town, but really big potential impact.

There is a legal and political drama unfolding in Central Falls, Rhode Island, which has national implications for municipalities suffocating under union contracts and pension obligations, but which has received little attention outside Rhode Island.

The town went into receivership; the receiver has the ability to void ALL contracts, including those of the town's employees.

...Central Falls' "actuarial accrued liability" for pensions exceeds $35 million, but there are only $4 million in assets. The annual contribution required by the actuaries for 2009 was $2.7 million, of which the City actually contributed $0. No funds are available for 2010 contributions.

...Expect the court battle -- and the negotiations with the unions -- to be intense, because the stakes are so high. A court hearing is scheduled for June 9 as to whether the temporary receivership will be made permanent.

Well, it's unique in that it's a small town with damn little in tax-base. But....

HT: Insurrection

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