Governor's Municipal Fiscal Stress Task Force Releases

Final Report to Measure the Fiscal Stress and

Financial Condition of Rhode Island Cities and Towns

At a meeting of the Municipal Fiscal Stress Task Force, Governor Donald L. Carcieri accepted the final report of the Task Force: "Report to Measure the Fiscal Stress and Financial Condition of Rhode Island Cities and Towns."

Governor Carcieri issued an Executive Order creating the Task Force in August to measure the fiscal stress on towns and cities and to assess the financial condition of Rhode Island's municipalities. The Task Force developed a set of criteria to measure the fiscal stress of municipalities and applied those criteria to evaluate the financial conditions of each Rhode Island city and town.

The Task Force identified several objectives including: to provide an assessment tool for measuring the financial condition of Rhode Island's 39 cities and towns; to establish benchmarks for performance standards as recommended by the task force and as a supplement to standards employed by fiscal rating agencies; and to establish a base document that will ultimately identify financial performance trends and is updated yearly.

Twenty one stress indicators were used to measure the financial position, the financial flexibility and the tax capacity of each municipality. The scores assigned to municipalities were based on a scale of one to five, with one being low stress and five being high stress. The quintile scores for each category of indicators were then combined, with financial position weighted greater than the other categories, to yield an overall quintile ranking.

Of Rhode Island's 39 cities and towns, two had a combined quintile score of four (4) or above; Pawtucket (4.17) and North Providence (4.04). Four municipalities had a quintile score of more than 3.75: Central Falls (3.92), East Providence (3.95), Warwick (3.78), and West Warwick (3.79). Providence (3.58), Woonsocket (3.60) and Johnston (3.58) had a quintiles score of more than 3.5 but less than 3.75. The municipalities with the lowest quintile scores are Little Compton (1.53), Jamestown (1.76), Charlestown (1.83), and Hopkinton (1.92).

When accepting the report, Governor Carcieri recognized the challenges facing Rhode Island's municipalities and thanked the Task Force for their work. "There is no question that our cities and towns are under tremendous fiscal stress, some more than others. I commend the members of the task force for their work in collecting and analyzing the data, and for creating a tool which we can use going forward to help our municipalities identify stress and develop solutions to alleviate stress. With that in hand, we can move forward to develop long term solutions to improve the fiscal integrity of all our cities and towns."

"If we are to be collaborators and not competitors in governing and delivering services to Rhode Islanders, everyone must commit to taking decisive action that changes how government functions in our state. The answer to declining revenues and fiscal stress is not to raise taxes. There will be continued fiscal pressure on our cities and towns this year. The tools created by the Task Force will assist municipalities to rethink financial priorities and service delivery methods, strengthen long-term financial planning, and to communicate with taxpayers on what has transpired to create stress and develop a plan to alleviate that stress."

"We know this much is clear, our cities and towns are paralyzed in their ability to control certain aspects of municipal spending, due, in great part, to unfunded state mandates and the inability to approve school budgets. In my FY 2010 Supplemental Budget, I have proposed a series of reform tools to give Mayors and town administrators the tools they need to control spending. I urge the General Assembly to pass these legislative tools quickly, allowing municipalities to benefit and bring their spending in line," continued Governor Carcieri.

Warwick Mayor Scott Avedisian, who served on the Task Force, noted the need to continue its efforts. "The work the Task Force has undertaken is commendable. While the tools and data analysis have limitations and need to be perfected, I am confident we can improve upon this by continuing the work that we have begun. I urge the Governor to act quickly to establish a permanent Municipal Fiscal Future Commission to monitor updates and to make recommendations."

"When we set out, our goal was to provide communities with meaningful information which they could use to diagnose the causes for the fiscal stress, said Peder Schaefer, Chief, Division of Municipal Finance. "For local governments to develop strategies to address fiscal health there needs to be reliable data leading to meaningful analysis."

Michael Embury, North Kingstown Town Manager, president of the Town Managers' Association and co-chair of the Task force, said, "This document is an important starting point for local governments as we move forward through difficult financial times. The true utility of this document will be evident as updated information is brought into the analysis - specifically the dramatic effects of FY 2009 and FY 2010 on local governments."