PROVIDENCE, R.I. (WPRI) – Mayor Jorge Elorza said Tuesday he has taken a “really, really hard look” at what bankruptcy would mean for Providence, but he doesn’t believe it’s a path that should be considered for Rhode Island’s capital city.
In a wide-ranging interview, Elorza acknowledged he has discussed bankruptcy with Detroit Mayor Mike Duggan, who leads the largest municipality to file for bankruptcy in United States history. Elorza said Duggan told him he “wouldn’t wish that process on anyone.”
“Bankruptcy is not an option,” Elorza, a first-term Democrat, told Eyewitness News. “And the reason for that is bankruptcy is not a solution.”
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In an op-ed published in The Providence Journal Sunday, retired Hasbro CEO Alan Hassenfeld and former Republican gubernatorial candidate Ken Block suggested bankruptcy could be “game changing” for the city, noting that it could help officials restructure $1.9 billion in unfunded retiree pension and healthcare obligations.
Hassenfeld and Block cited Detroit and Central Falls as examples of cities that have successfully navigated the bankruptcy. They suggested Providence’s “fiscal instability is eliminating any hope of an economic resurgence” in Rhode Island.
But while the Motor City’s balance sheet may have improved, Elorza said Detroit “in so many ways is a wasteland” outside of its central business district. He also pointed out that bankruptcy in Central Falls brought five years of maximum tax increases along with reductions in city services.
The talk of bankruptcy “is just more of the same,” Elorza said. “It’s us looking for a quick fix to lingering and structural problems.”
Elorza cited Fitch Ratings’ recent decision to upgrade the city’s credit rating and a $9.5-million surplus for the fiscal year that ended June 30 as signs he has helped improve the Providence’s finances.
But he also acknowledged there is more work to be done, particularly when it comes to retirement obligations. He said his hope is to strike a “grand bargain” with the city’s retirees, but said he still needs to craft a plan to begin those negotiations.
“Every decision I’ve made has been establishing a foundation with the long term in mind,” he said. “We didn’t get into this pension crisis overnight and there is no quick fix to it either.”