The Central Falls City Council plans to hire a lawyer to challenge the authority of its state-appointed receiver, according to news reports.
Receiver Mark Pfeiffer has told the council that the city won’t pay the lawyer’s bills, but the council last week voted to hire one anyway.
The City Council has balked at the receiver’s $16.8 million budget unveiled earlier this month, which includes a 10% property tax hike to help close a $6.3 million deficit.
The budget also raises motor vehicle taxes, cancels payments to police and fire pension funds, and counts on the sale of $2.1 million of deficit bonds.
City Council President William J. Benson Jr. said the budget was too extreme, according to the Providence Journal.
Central Falls, which has a population of 19,000, went into judicial receivership — Rhode Island’s equivalent of bankruptcy — in May after it projected a $3 million shortfall in its nearly $18 million fiscal 2010 budget, along with a $5 million gap for fiscal 2011.
Rating agencies downgraded the city to junk, prompting state legislators to enact a law that prevents municipalities from going into judicial receivership on their own and sets up a system for state intervention in fiscally distressed cities and towns. The law gives a receiver the same authority as elected officials.
The Rhode Island chapter of the American Civil Liberties Union has criticized the legislation as being unconstitutional for usurping local government authority. Gov. Donald Carcieri’s office rejected the criticism and said it has legal precedent.
