The state-appointed budget commission overseeing East Providence, R.I., will begin to transition control of the city back to its elected officials and administration, Rhode Island Gov. Lincoln Chafee and Department of Revenue Director Rosemary Booth Gallogly announced late Thursday.
The commission will provisionally delegate its authority to the city manager, city council and school officials until the state makes a final determination that the commission is no longer necessary, Chafee and Gallogly said in a joint statement.
“East Providence is a proud community, and I am encouraged that this collaborative, cooperative process has placed the city back on a path to financial stability,” Chafee said.
East Providence, a 49,000-population city, has been under budget commission control for 15 months. The commission is the second of three levels of intervention for financially troubled cities under a state law passed in 2010.
State officials cited several improvements the city made during that time, notably stabilizing cash flow and eliminating a multi-year operational deficit, reducing its reliance on short-term borrowing to meet cash-flow needs, and adopting a balanced, five-year plan that fully funds the pension fund annual required contribution and the other post employment benefit, or OPEB, liability.
East Providence, during those 15 months, also stabilized its general obligation bond ratings from Moody’s Investors Service and Standard & Poor’s. Moody’s adjusted its outlook to stable from negative while maintaining its Baa2 rating, while Standard & Poor’s, which rates the GO bonds BB-plus, gave a positive outlook while taking the city off credit watch.
The city also received approval from the U.S. Department of Justice in January to use nearly $50 million of its allotment from a settlement with online search engine Google Inc. to defray police pension liability. East Providence and North Providence received $60 million for assisting a federal investigation into online ads distributed by Google for Canadian pharmacies that were illegally marketing prescription drugs to Americans.
Commission member Michael O’Keefe has ended his service. “The city’s finances and operations are certainly in a stronger condition because of his insight and expertise,” Gallogly said. Gallogly’s deputy, Christy Healey, will replace him.
Other commission members were Steven Bannon and Diane Brennan.