[Renee Montagne:] Congressional leaders have a big task ahead of them today. Democrats and Republicans need to convince their membership to approve a budget deal worked out with the White House last night. It would cut at least $2 trillion from federal spending over the next decade and would raise the nation's borrowing limit.
[Steve Inskeep:] As leaders in Washington call for support for that agreement, cities and towns across the country are struggling to balance their budgets. Few cities face a struggle as big Central Falls, Rhode Island. A few weeks ago, we told you the city was seeking to make deep cuts to its pension benefits to avoid bankruptcy. It has now asked retirees to vote on those cuts. As Catherine Welch of member station WRNI reports, Central Falls will announce today whether enough retirees have agreed to the cuts to prevent further drastic measures.��
[Catherine Welch:] Last month, in a sweltering high school auditorium, the receiver of Central Falls told scores of police and firefighters that to keep the city from going bankrupt they'd need to take cuts to their pensions and help pay for healthcare. Sitting front and center was retired firefighter Howard Baskins.
[Mr. Howard Baskins:] I have no earning capacity. I have no way of making up the difference. I gave all I can give my body.
[Catherine Welch:] But the city wants more. It's proposing cuts that could chop some pension checks in half. Central Falls got to this point because like many towns it didn't fully fund its pension obligations. Combine that with a lack of financial planning, and some sketchy deals by politicians, and the city is in such a financial mess that the mayor turned the keys to city hall over to a receiver more than a year ago. That receiver is Robert Flanders, who's now trying to cut pensions. He knows he's asking for a lot, but says Central Falls' coffers are depleted and the city will run out of cash by the end of this month.
[Mr. Robert Flanders:] An $80 million unfunded pension liability on a $17 million budget is a huge hole to try and fill.
[Catherine Welch:] To help fill that hole, Flanders wants to take a chunk from everyone who retired before turning 60. That includes Howard Baskins, who back home in his modest two-bedroom apartment, pulls out the letter he got from Central Falls detailing cuts to his pension.�
[Mr. Howard Baskins:] Dear Mr. Baskins, you are aware on July 19th, 2011...
[Catherine Welch:] Baskins and the other 140 retirees got a ballot to vote on whether they'll accept or reject the cuts. When Baskins first heard that there would be pension cuts, he wasn't sure what to think. But when he saw that Central Falls would cut his checks by $6,000 a year, he knew how to vote.� That's a very strong, dark X in the I reject.
[Mr. Howard Baskins:] Yeah, that's anger.
[Catherine Welch:] Did you have to think about it?
[Mr. Howard Baskins:] Not very long, I think about maintaining the things that I have to do daily to live. You know, the rejection came easy.
[Catherine Welch:] If enough of them feel the same way, receiver Robert Flanders says one of the only choices left is for Central Falls to file for Chapter 9 bankruptcy, allowing a bankruptcy judge to rip up all union contracts.
[Mr. Robert Flanders:] A haircut still looks a lot better than a beheading. In a bankruptcy it's possible that there could be a worse situation than what we're proposing.
[Catherine Welch:] Jefferson County in Alabama and Harrisburg, Pennsylvania are also considering bankruptcy. And then there are a handful of other cities in Rhode Island with serious pension problems. That's why Flanders says the state won't save Central Falls, because a bailout could send a message that Rhode Island just can't afford. For NPR, I'm Catherine Welch.