Public Sector Unions – Not Sharing the Sacrifice & Are Bankrupting Cities

Central Falls, Rhode Island

Governor Walker of Wisconsin might one day be hailed a hero more than he is reviled today. His understanding of the dangers of collective bargaining by public sector unions are prescient as demonstrated in Central Falls, Rhode Island.

The Central Falls website sports beautiful photos of the quaint, riverside village in New England’s Rhode Island. Underneath the photos is a Margaret Meade quotation,  “Never doubt that a small group of thoughtful citizens can change the world.”

Dating their origins to 1731, the city bills itself as “A City with A Bright Future.” Central Falls started as a textile village; it is the smallest but most densely populated city in the nation; it is the proud home of an underground railroad; and it was once called Chocolateville after a chocolate factory that once stood there.

According to their site…a celebration, at the middle falls, was held in 1824 to dedicate a mill and bridge, built by David and George Jenks.  After several speeches were delivered, Stephen Jenks, a prominent businessman, arose from his chair and declared that the village should be named “Central Falls” and thus the City received it’s official name. The village, at that time, was made up of the trip-hammer shop, the ship-iron workshop and the Stone House which was located on the road to Providence it was a popular stop for travelers and the Chocolate mill…

It is as delightful as New England gets until you look beyond the facade. It is bankrupt.

It might as well be called Greece. What was left off their website was the fact that it is Rhode Island’s poorest city and it is now dealing with bankruptcy. They cannot meet their pension obligations. In fact, they filed for Chapter 9 bankruptcy.  They filed the petition after the police, firefighter and municipal retirees refused to accept voluntary benefit concessions. Robert Flanders, a judge who is overseeing the city’s finances, asked the court to reject existing collective-bargaining agreements with the unions.

He said, “The current situation is dire, and necessitates decisive steps to put the city back on a path to solid financial footing and future prosperity,” Governor Lincoln Chafee, who joined Flanders in announcing the bankruptcy petition today, said in the statement. “We will be exploring all options to provide quality services at an affordable cost to all taxpayers.”

Public sector unions bargain, not with their employers (the taxpayer), but with politicians, the same politicians who need their votes to get elected. The politicians rely on the unions to bankroll their runs for re-election. A corrupt system if ever there was one. Public unions are often rigidly greedy and will cede nothing, even when there is no money left in the coffers. They do not care if they kill the golden goose. Hopefully, we will stop bailing everyone out so the failed entities do what needs to be done – cut!

Bloomberg news reports…Central Falls, a city of about 18,000 located about 6 miles (9.7 kilometers) north of Providence, is the fifth municipal entity to file for bankruptcythis year, compared with six in all of 2010, according to data compiled by Bloomberg. The filing followed last week’s move by lawmakers in Jefferson County, Alabama, to postpone a vote on proceeding with what would be the biggest U.S. municipal bankruptcy.

The Central Falls pension plan was expected to run out of assets by October without additional funding or significant concessions from both current employees and retirees, according to a June 17 report from Moody’s Investors Service. The rating company at the time lowered the city’s credit grade one level to Caa1, its 17th-highest of 21, from B3.

Central Falls has been in the news before. If you’ll remember, the School Superintendent, in despair over poor student performance, fired every teacher.  Arne Duncan and  Obama supported the move, demonstrating their commitment to school reform. In the end, and after lawsuit filings, the Superintendent was forced to rehire the teachers with concessions by the unions. Teachers were required to recommit to their jobs.

Can we have reform with intractable public sector unions?