Stephen Beal
GoLocalProv
10/23/2010
The city of Providence is running out of money and is behind on its payments to the pension system, Internal Auditor James Lombardi warned in a report released this week.
Mayor David Cicilline is running for the Congressional seat left vacant by Patrick Kennedy.
“Based on the current situation and the information in my report … there’s no question we will run out of money,” Lombardi told GoLocalProv.
Lombardi said the city’s cash reserves had dwindled down to $4.6 million, from $36.6 million at the beginning of the 2010 fiscal year. In addition, he said the city did make the required monthly contributions to the retirement system during the year. He said the city owed $38 million to its pension system but had paid only $20 million—$10 million earlier in the year and another $10 million this week after the city learned of his pending report.
He also revealed that the $49 million the city borrowed to cover deficits last year and in the current fiscal year appears to no longer be available. The contingency funds the city maintains have also gone from $14.4 million in July 2009 to negative $187,736 in June 2010, according to Lombardi.
In a best case scenario, he said the city could run out of cash between April and September 2011, in between tax collections. The worst case scenario: the cash runs out even earlier.
“Based on the current cash positions, I do not believe that the City can complete the fiscal year without a supplemental tax increase, severe budget cuts that will affect services, and/or borrowing funds to balance the budget,” Lombardi concluded…
…Councilman John Igliozzi, the finance chairman, also rejected the charge. “This is about the people of Providence. They have a right to know this information and understand where there money is going, especially in these extreme financial times,” Igliozzi said.
Lombardi said he had been requesting documents from the city since April and even had to submit public records requests for the information, which he did not receive until two weeks ago…
…The mayor’s office picked apart the findings of Lombardi’s report, denying that the city was about to go broke. “Over the last five years, the State has reduced payments due to the City of Providence by $42.5 million, which created an extraordinary challenge but we managed through it and the City is on solid ground,” the mayor’s office said in a statement released to GoLocalProv. “The City’s reserves are currently at about $30 million.”
Cicilline’s office also said that some of the borrowed $49 million would not close before the fall. One loan of $19.5 million, from the Providence Public Building Authority, will not close until mid-November, which is why it has not showed up in the city’s books, according to Watts…
Read the entire article at GoLocalProv.
