By Hilary Russ
Tue Dec 23, 2014 7:20pm EST
Dec 23 (Reuters) - The state-appointed receiver for a small fire district in Central Coventry, Rhode Island, filed a petition to put the district into Chapter 9 municipal bankruptcy protection on Tuesday.
The filing was expected. The Central Coventry Fire District had been negotiating with the firefighters union for about a year and a half. Receiver Steven Hartford has said the district cannot afford to keep operating without a revised labor contract.
"This is an unfortunate step," Governor Lincoln Chafee said in a statement, adding that "bankruptcy is the only tool left" to get the district back on the right course.
"I fully expect the district to emerge from the bankruptcy with a reorganized and downsized operation that can pay back its debts and maintain a proper fire and rescue service, as well as assure tax stabilization for the residents," he said.
Negotiations will continue while the case unfolds, he said. The goal is to finish the case "as soon as possible and obtain a confirmed plan to provide the district with a balanced budget for the next five to six years."
In 2011, Central Falls, a tiny city north of Providence, also filed for bankruptcy. In that case, many public employees saw their pension benefits slashed in half.
David Gorman, president of the International Association of Firefighters, Local 3372, said the fire district's bankruptcy filing was "just another black mark for the state of Rhode Island" and was politically motivated.
"We believe there was a lot of push to get this out" before incoming Governor Gina Raimondo takes office in January, he told Reuters in a telephone interview.
The fire district has its own taxing power and is independent of the town of Coventry. The district's board of directors, elected by taxpayers, asked to put the district under court oversight in 2012, according to bankruptcy documents.
The district had overestimated revenues by 15 percent of its total budget - for two consecutive years - resulting in a more than $1.6 million deficit. Despite the shortfall, the district hired new employees and leased new equipment, bankruptcy documents said. The state appointed a receiver in May. (Reporting by Hilary Russ; Editing by Ken Wills)
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