PROVIDENCE, R.I. (AP) — The state receiver in Central Falls whose law firm had been advising financially troubled Providence on paring pension benefits said Tuesday he was given no reason when Providence severed its ties with his firm — and that he does think the capital can avoid bankruptcy.
Robert G. Flanders Jr. told The Associated Press that city lawyer Jeffrey Padwa called him Monday afternoon and said that the services of Hinckley Allen & Snyder, where he is a partner, were no longer needed.
Providence Mayor Angel Taveras later issued a statement saying that recently reported comments by Flanders on Providence's fiscal crisis had caused harm and were "unacceptable."
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Bloomberg reported last week that during an interview at a conference in Philadelphia, Flanders said Providence would probably seek bankruptcy protection to address its budget deficit: "I don't see how they can get out of it without going there."
"I do not share Judge Flanders' opinions," Taveras said in the statement. "I believe that Providence can make the difficult reforms to strengthen our fiscal foundation and position our city for future growth and prosperity. Through shared sacrifice from taxpayers, our retirees and the tax-exempt colleges, universities and hospitals, I believe we can avoid bankruptcy and will only consider such action as an absolute last resort."
Asked to elaborate, Taveras spokesman David Ortiz said the city has been concerned about "private and public comments" Flanders has made in the past month, including at the Bond Buyer conference in Philadelphia.
The city is facing a $22 million budget gap this fiscal year — what Taveras has called a "black hole." The mayor has said the city could run out of cash by the end of June, and that bankruptcy could be an option.
Flanders' firm was hired in October to provide counsel on pension benefits, Flanders said, and municipal bankruptcy has been discussed in general terms.
Flanders, who filed for bankruptcy on behalf of Central Falls last year and cut pensions there, said he didn't call bankruptcy an unavoidable fate for Providence.
"I said it was going to be difficult for him to obtain the concessions he needed from retirees and other stakeholders in time to avert a need for a bankruptcy filing, if he was in fact going to run out of cash by June. That's very different," Flanders said.
He said bankruptcy is "obviously avoidable" if Taveras can win concessions from retirees, if the General Assembly adopts proposals by Gov. Lincoln Chafee to give highly distressed municipalities state permission to reduce pension benefits and if the courts don't block those efforts.
Flanders said Tuesday his firm was not actively providing services to the city at this time.
Ortiz said the city has been billed for just under 20 hours of the firm's time. The rate is $395 an hour.
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