The state-appointed receiver overseeing Central Falls, R.I., said he will remain in that position until a recovery plan is in place for the troubled city.
"I met with the governor's staff today and what was said was that once a plan of recovery was achieved, either through negotiations with unions or through a bankruptcy filing, after that they would transition to a manager-receiver to implement that plan," Robert Flanders said in a telephone interview on Thursday.
Two days earlier, Gov. Lincoln Chafee, who had appointed Flanders in January shortly after taking office, had suggested that Flanders, a retired Supreme Court justice and a partner at law firm Hinckley, Allen & Snyder LLP, would be replaced.
"There is some sense that some kind of experienced municipal manager, now that we go through the legal aspects as they conclude, might be better suited," Chafee told public radio station WRNI-FM.
Moody's Investors Service last month downgraded Central Falls' general obligation bond rating one level to Caa1 from B3, affecting $20.8 million of outstanding debt. The city of 19,000 people faces $80 million in unfunded pension and benefits obligations and an estimated $25 million in deficits over five years.
Flanders last month said the city would file for bankruptcy unless city employees and retirees accept pension cuts.
"I suspect things will come to a head within the next several weeks," Flanders said Thursday. Asked about the chances Central Falls would declare bankruptcy, he said: "I don't like to handicap that situation."
Flanders, who has near-total control of city government, last week announced the closing of the public library and a community center. The closings and layoff of 12 people were expected to save the city $400,000. The library could reopen in the fall under private ownership — a trust owns the building and grounds.
Lawrence Goldberg, the attorney representing the Central Falls City Council, called Flanders "an oocupier who is the equivalent of an installed military governor. He is usurping every bit of government, down to the dog catcher."
Goldberg wants Central Falls elected officials to have more say in crafting a recovery plan. The state legislature last week passed a bill that would expand such municipal powers. It is on Chafee's desk.
Flanders succeeded another retired judge, Mark Pfeiffer, who was appointed in July 2010 by Rhode Island's previous governor, Donald Carcieri.
Central Falls went into judicial-appointed receivership in May 2010 after Mayor Charles Moreau and the City Council petitioned the court and said the city was insolvent.
During the state legislature's budget deliberations, the House Finance Committee eliminated $6.7 million in aid to Central Falls. Chafee, an independent, had proposed $1.8 million to cover a shortfall for fiscal 2011, which ended June 30, and a further $4.9 million for the new budget year.