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Rhode Island Update: The Meltdown Continues

Add another problem to Rhode Island’s lengthy list — the New York Times reports that the City of East Providence has just gone into receivership due to the usual cause, to wit: an inability to pay its bills. The state government, which is facing serious financial problems of its own, has appointed an overseer to direct the city out of its crisis. He will have his work cut out for him — as the Times notes, this is the second Rhode Island city in as many years that has been forced into receivership.

Because of its small size, inbred political system and collusive relationships between irresponsible union and political officials, Rhode Island is reaching the end of the road faster than many other places — but Rhode Island and its cities are not alone on the highway to doom.  Unrealistically high pension promises matched by unrealistically low savings with a gap papered over by sci-fi and fantasy rate-of-return assumptions; a declining real economy unmatched for years by appropriate reductions in state and municipal overhead; serial failure of one legislature and governor after another to take the state’s declining economic condition seriously to heart: the road to hell is paved with good intentions, and filled to capacity by carloads of get along, go along politicians.

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  • Kenny

    They’re reaping what they’ve sown.

    Love it!

  • Mogden

    I agree with your description, except for the “good intentions”, of which there are none.

  • Andrew

    Professor Mead,

    If I may offer a correction, East Providence is not yet in receivership. There is a 3-stage process in Rhode Island law where the state takes various levels of control over a financially distressed community. East Providence has entered the 1st stage of this process, with the appointment of a “fiscal overseer” (great title in a modern democracy, eh?). Basically, the existing city government stays in place, but the overseer and the state’s Director of Revenue get a veto over the municipal budget, and the overseer is also required to sit in on all contract negotiations. Receivership is the third stage, where a receiver assumes all of the powers of the elected government. In between, there’s a “budget commission” stage, where a committee dominated by state appointees takes over formal budgeting authority in a municipality.

    BTW, for various reasons, one of which is the recent passage of the receivership law, I think Rhode Island is on the leading edge of a movement that is unintentionally dragging governance in America to practices more reminscent of Tudor England than of more modern democracies (I might be convinced that it’s only going to get as bad as the post-Interregnum Stuart period, though). Rhode Island is doing its part to undo the Glorious Revolution and the settlement that followed, specifically the principle that the only legitimate claims on the livelihoods of the people are appropriations of finite duration — no incomes for life from taxation of the commoners, for the king or anyone else — that have been voted by the freely chosen representatives of the people.

  • Jay

    Pretty much sums up RI AND national politics! This and last Sunday’s 60 Minutes piece about Congress legislating their exclusion from insider trading laws should ENRAGE every citizen of this country. Your best comeback is on election day! Are you going to continue with the “there they go again” response or change the line up next November with your vote!?

  • Pieter

    STOP MOVING SOUTH… Yankees built your MESS …..and your […] can fix it!!!

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