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Governor Lincoln D. Chafee Unveils Municipal Reform and Relief Legislation

Pawtucket, RI - Governor Lincoln D. Chafee joined with municipal leaders from across Rhode Island today in Pawtucket to unveil a legislative package of reform and relief measures that will empower local officials to take the needed steps to achieve fiscal health for their communities. Pointing to news today of Woonsocket considering closing schools early and Providence's bond rating being downgraded, Governor Chafee called the municipal fiscal crisis a critical economic development issue and said in no uncertain terms that the time to act – the "time of urgency" – has arrived.

"We are facing three choices in Rhode Island: let our communities go bankrupt, watch property taxes continue to skyrocket, or give our municipal leaders the tools and relief they need to achieve fiscal stability for their communities. Today, I propose that we choose the latter," Governor Chafee said.

"This legislation will empower municipal officials – many of whom I am pleased to join with today – to address the structural problems that threaten our cities and towns and hold hostage the very future of our state. Only when we have fixed the structure and workings of state and municipal governments in Rhode Island will we revitalize our economy and create the jobs and opportunities we need. I call on the House and Senate to move quickly to pass these bills and provide much-needed relief to our struggling communities and the property taxpayer," Governor Chafee continued.

"Governor Chafee's municipal legislative package is a way forward for cities and towns that need the necessary tools to make structural reform. I support and applaud the Governor's efforts and believe that cities and towns must make tough, structural changes to strengthen our entire state," said Providence Mayor Angel Taveras. "I will continue to work with Governor Chafee to get Providence on firm financial ground, and I appreciate his determined efforts to strengthen Rhode Island."

"In proposing this new legislation, Governor Chafee clearly recognizes the need for the state to better support its cities and towns. He understands that for the State of Rhode Island to survive and prosper, its cities and towns must survive and prosper," said Pawtucket Mayor Donald Grebien.

The Governor's municipal reform and relief legislative package includes seven bills:

* Allowing municipalities with poorly funded pension plans to suspend annual cost of living adjustments until the plans are better funded – just as the state did as part of its pension reform.

* Offering mandate relief and binding arbitration reform for four highly distressed communities – Providence, Pawtucket, Woonsocket, and West Warwick. These communities were hit hardest by the loss of state aid to municipalities in recent years. The state cut $220 million in municipal aid between FY 2008 and FY 2011, but did not repeal costly mandates, forcing cities and towns to raise property taxes and slash services. This legislation provides mandate relief to control costs and reduce the need for additional property tax increases. It also limits the scope of binding arbitration in highly distressed communities to only salary-related issues, and places primary emphasis on a community's ability to pay when deciding awards.

* Instituting new budget accountability measures for school spending, following numerous cases of significant deficits and fiscal mismanagement by school committees. The state will have greater oversight of school budgets and have an early warning system if schools are spending above their budgets.

* Requiring communities with overly generous pension benefits to bring pensions in line with the state system.

* Reducing disability pension benefits for employees that can perform other jobs.

* Advancing municipal aid to avoid cash flow problems.

* Providing certain exemptions for school maintenance of effort requirements.

For more details on the Governor's municipal reform and relief legislative package, please see the attached summaries:

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