Bankruptcy filing would be a basis for Providence resurgence

From Robert Whitcomb's Dec. 15 "Digital Diary'' in GoLocal24.com.

Ken Block, the systems analyst and formerRhode Island gubernatorial candidate, and Alan Hassenfeld, former CEO of Hasbro, are right to urge that Providence promptly be put into bankruptcy protection. (I have said for years that the city should do this.)

The city’s vast $1.9 billion liability for unfunded pensions and capacious retiree health benefits, and largely intransigent municipal unions, make it impossible for the city to dig itself out of its hole unless it goes into bankruptcy, with a  highly experienced, decisive and tough receiver appointed by a federal judge to make drastic and long-overdue changes.

The aforementioned liabilities can be blamed largely on  past mayors’ (especially the late, outstandingly corrupt  thug Vincent Cianci) sweetheart deals with labor unions in return for their political support,  and wishful thinking about, for instance, the rates of return possible for the city’s investments.

Paying for this immense debt eats up money that otherwise could go into better city services and lower taxes. Better services and lower taxes would, of course, make Providence much more attractive to taxpaying businesses and individuals that might consider moving to it. The city’ssuperb location, distinguished educational and other institutions (albeit too many of themofficially “nonprofit’’ and thus sharing little of  the tax burden) and many cultural charms would have drawn many businesses, large and small, over the past few decades if its fiscal condition had been healthy.

Providence is already effectively bankrupt. It’s past time to accept that and enter a fast and efficient bankruptcy process. Detroit has recently done just that and is now enjoying a revival. So has Central Falls. And Providence has much more going for it in the long run than Detroit, especially in  location and institutions. It’s embarrassing for politicians and residents in general to admit that their city is bankrupt, but energizing to know that bankruptcy can help shovel out the manure left by years of irresponsible governance.

Disinfecting Providence’s finances would, of course, be a big boost to all of Rhode Island, which is in many ways a city-state, and indeed to all of southeastern New England, of which Providence is the center.

Charles Chieppo: Every state should have gubernatorial line-item veto power

The recovery from the Great Recession has largely been a half-­hearted one, and few see the economy improving dramatically in the near future. These realities present challenges for state and local governments that will likely require a range of responses, but giving governors the line-­item veto should be seen as low­-hanging fruit for the six states that don't have it.

Those states are Indiana, Nevada, New Hampshire, North Carolina, Rhode Island and Vermont, and there is a movement afoot in at least one of them to do something about it. Three bills pending in the Rhode Island legislature would put the issue before the Ocean State's voters this November.

Former gubernatorial candidate Ken Block, founder of the state's Moderate Party, has created a Web site, lineitemveto.org, that has gathered more 900 signatures for a letter urging the state's leaders to support the change.

There's good reason to consider the idea. The long­-term fiscal forecast is far from rosy for states and their local governments. A decade ago, the concern was rising health­care costs. Then came a number of municipal bankruptcies fueled in part by the costs of long ­underfunded pension systems. Next came a rule from the Government Accounting Standards Board that required governments to report liabilities associated with postemployment benefits such as retiree health care.

More recently, the focus has been on the need for costly improvements to infrastructure at a time when the sluggish recovery has produced slow revenue growth. It's not as though the line­item veto, which allows governors to delete items or parts of items in an appropriations bill without rejecting it entirely, will solve these problems for the six states that don't allow it ­­ after all, plenty of states that do have it struggle with their finances ­­ but it's one of the tools that will be needed if governments are to survive the fiscal challenges to come.

Like most things in politics, the full impact of the tool can't be measured in dollars and cents. The threat of the line-­item veto can shape debates and make it harder for legislators to lard up popular bills with pork. A line-­item veto could be overridden by lawmakers, but not without shining a light on provisions they might not want the public to pay a lot of attention to.

The temptation for public officials to duck responsibility for dealing with hard problems and let successors wrestle with them is always going to be great. But state and local leaders who want to deal with problems now face difficult choices. One approach, of course, would be to raise taxes, but voters are rarely happy about that. Another would be for governments to retreat entirely from some areas they now fund.

One could make a realistic argument that the public sector does a number of unnecessary things, but the inconvenient truth is that in a democracy every one of them has a constituency.

In most states, the far more realistic approach will be a combination of raising revenues and finding savings. The line ­item veto may be an imperfect tool for accomplishing the latter, but it's one that all states ought to have at hand.

Charles Chieppo (Charlie_Chieppo@hks.harvard.edu) a research fellow at the Ash Center at Harvard''s Kennedy Center. This piece first ran on govering.com.