Providence, RI - Governor Lincoln D. Chafee announced today that Department of Revenue (DOR) Director Rosemary Booth Gallogly will appoint a five-member budget commission to help assist the City of East Providence in its efforts to achieve fiscal stability. The commission is the second of three possible steps -- fiscal overseer, budget commission, and receiver -- of state intervention under the Fiscal Stability Act of 2010. In November, Governor Chafee and Director Gallogly announced the appointment of Major Stephen M. Bannon of the Rhode Island State Police as fiscal overseer for East Providence.
The City of East Providence has been challenged over the years to resolve a growing cumulative school deficit, estimated at $7.2 million in FY 2011. The City's FY 2012 adopted budget resulted in an additional $7.2 million budget gap, which the City is attempting to resolve. Last week Moody's downgraded the City's bond three notches to below investment grade. As a result, the City will be facing more significant challenges in securing the short term financing it has historically relied upon to pay bills and city payrolls.
"This step will allow the state to further assist the City of East Providence and help it reach fiscal stability," Governor Chafee said. "My Administration has been proactive in confronting financial difficulties in our cities and towns, and we will continue to help struggling municipalities and protect the property taxpayer wherever necessary. I am confident that East Providence elected officials, employees, and taxpayers will ultimately view this as a positive and will welcome the establishment of the budget commission to assist in the development of a plan that resolves the prior year deficits, brings the current year into balance, and provides for structural balance in the future."
"Based upon Major Steve Bannon's finding that a budget commission should be appointed for the City, as well as my own familiarity of the current fiscal challenges being faced by the City of East Providence, I have determined that the appointment of a budget commission is in the best interests of the City," Director Gallogly said. "Therefore, I have advised Governor Chafee that I am abolishing the fiscal overseer position and establishing a budget commission for the City."
Major Bannon, appointed as fiscal overseer for the City of East Providence on November 14, has concluded that the City (1) is unable to present a balanced municipal budget; (2) faces a fiscal crisis that poses an imminent danger to the safety of the citizens of the City and/or their property; and (3) will not achieve fiscal stability without the assistance of a budget commission. He indicated this in a letter dated December 19, 2011 and further recommended that a budget commission should be appointed for the City.
"I am pleased that I have recruited three public members to serve on the budget commission who have valuable public finance experience," Director Gallogly said.
Director Gallogly's designees to the commission are: Michael O'Keefe (former Budget Officer and House Fiscal Advisor) of North Providence; Diane L. Brennan (City of Warwick Financial Report Analyst) of Seekonk, Massachusetts; and Major Stephen Bannon (Chief Administrative Officer of the State Police) of Smithfield. The other two members of the budget commission will be East Providence City Council President Bruce Rogers and City Manager Peter Graczykowski.