Cienki Says EG Is Bankrupt

by | Nov 12, 2018

By Elizabeth F. McNamara

Outgoing Town Council President Sue Cienki, who lost her bid for re-election last week, said East Greenwich is bankrupt in a rambling email to EG News (Cienki email 11/10/18) Saturday. This follows the announcement by Town Manager Gayle Corrigan on the Dan Yorke Show Thursday that the town had a stunning $2 million deficit for fiscal year 2018 – after months of refusing to reveal any year-end financial information. 

In an interview before the Veterans Day Parade Sunday, Cienki said the town is heading toward bankruptcy but that using $1 million out of the town’s fund balance for the current year budget was not part of a larger bankruptcy plan, nor was keeping the tax rate flat. (Editor’s Note: Cienki did not speak publicly about financials as part of the parade festivities Sunday. We apologize for any confusion an earlier version of this story may have given.)

“Even if you raised taxes by 4 percent, you would still be in a deficit. So, what you need are structural changes,” she said. “The reality is, until you hit the abyss, and that’s where we’re heading, the abyss, we just had to do this.”

A 4 percent tax increase would yield $2.5 million.

The idea of bankruptcy to get out of labor agreements, including pension plans, has been floating around Rhode Island since the Central Falls bankruptcy in 2011.

In an email sent to various municipal leaders in 2016, former state Supreme Court Judge Bob Flanders (recent U.S. Senate candidate) – who was the receiver for Central Falls when it went into bankruptcy – outlined a way for other municipalities to restructure union contracts:

“The best chance to withstand a legal challenge to a municipality unilaterally changing its contracts and pension benefits is to do it through a chapter 9 restructuring. If the municipality can establish its eligibility (most importantly, its insolvency on a cash flow – not a balance sheet – basis; and its inability or impracticality of negotiating an acceptable debt restructuring plan with its creditors), then contract impairment and constitutional takings claims are effectively neutered and the municipality has its best shot of shedding crippling legacy costs and emerging with a balanced budget and a viable future.”

Town Manager Gayle Corrigan worked for Flanders in Central Falls and Flanders was the one to introduce Corrigan to Cienki in early 2017. The EG Town Council went on to hire Corrigan and her colleague Linda Dykeman to analyze first the school department’s finances, then later the town’s finances. By June, Corrigan was the town’s new manager and she had hired Dykeman as finance director. (Corrigan and Dykeman both donated $5,400 to Flanders’s Senate campaign in 2017, the maximum allowed. Cienki gave $1,000 to Flanders in 2017.)

But on Sunday Cienki said she wasn’t trying to speed East Greenwich into bankruptcy.  

“I’m not digging a deeper hole,” she said. “We’re trying to get everybody to say, guys, we have a pension problem. It’s not sustainable.”

Town financial information for 2018 has yet to be made public.


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14 Comments

  1. Susan Kurtz

    This is just so sad. What happened to the town I grew up in?

    Reply
    • David Maloney

      Hi Susan
      Its Dave Maloney..I didn’t know you grew up here. My wife and I live up on the Hill. I’m tire of the horrible contracts and taxes being raised and schools falling apart.

      Reply
  2. Ian Fink

    It is abhorent that a town gov would not disclose financial information. The government is not a business and can not be managed like a business. How can you expect people to agree with bankruptcy/ pension augmentation without relaying the pertinent data for the people to decide what is best for the town? Being a politician is a Civic duty, not an entitlement. However it seems that those in charge in E.G. are not able to decide that contrast.

    Reply
  3. David J Szerlag

    How do you go from an 11m surplus to bankruptcy in 2 years. Hire the incompetent team if Corrigan-Flanders that’s how. Wait until the Flanders legal team bill gets released, something we have not seen since February.

    Reply
  4. Camille Speca

    They thought they’d just steamroll right into another 2 years, continue to mislead the public, be combative, rude, secretive and bring us to bankruptcy.

    How much does Gayle Corrigan’s legal fees of of the $700k account for in the deficit?

    Reply
  5. Blue

    I don’t mean to be dull but is East Greenwich actually bankrupt or unless changes are made we are heading that way? Ms. Cienki and the out-going Town Council should be ashamed. Absolutely ashamed. To withhold the financial information until after the election was both spiteful and borderline negligent.

    Reply
  6. Tony DiBella

    If the town’s expenses exceed its income, it is running at a deficit. It has reserves to cover the deficit, so to say it is ‘bankrupt’ is inaccurate and misleading.

    Reply
  7. Arman

    I voted for Cienki, but glad to see that she lost. Ms. Cienki must have guessed that a deficit of $2m would not look good on her records prior to the election and thus hid the fact.

    Reply
  8. Ann

    Interesting fact: Ted Orson was the bankruptcy expert who handled Central Falls in its bankruptcy and was the lawyer who earned the most from that work. THEODORE ORSON
    Shareholder

    Mr. Orson is a co-founder of the Providence, Rhode Island law firm of Orson and Brusini Ltd. He is admitted to the bars of Rhode Island and Massachusetts where he practices in the areas of municipal insolvency, business insolvency and commercial litigation. He has garnered national attention for his work as lead counsel to the Receiver of the City of Central Falls and the State of Rhode Island in the Chapter 9 case of the City of Centrals Falls. He also represents the State of Rhode Island in two pending hospital receiverships.

    Interesting fact: Councilman elect Mr. Donegan is a lawyer in Mr. Orson’s firm.

    Reply
    • Mary Ward

      Think Mike Donegan is an environmental lawyer though, not even in the same room not that it is relevant.EG hasn’t hired Orson’s firm and likely won’t because it would obviously look like a conflict…Mike working there and being on the TC and all…can’t say the same for the prior relationships between Bob, Sue, Gayle and her associates who all ended up appointed without a hiring process in EG and all appear to have been on a bankruptcy/bust the unions strategy as often talked about by Bob Flanders in public speeches around the state..Lots of beneficiaries of the $3.8M fees from Central Fall bankruptcy, see attached…https://turnto10.com/archive/central-falls-receivership-ends-costs-add-up

      Reply
  9. bob ingerson

    funny thing the fire district was solvent, and had a surplus, before the town got their hands on it

    Reply
  10. Judy

    Bob Ingerson got that one right!!!!!!

    Reply
  11. J cardello

    Shameful and irresponsible

    This has been a real bad nightmare

    I hope in Corrigan’s employment contract was a stipulation stating some benchmarking to get her severance.

    Who am I kidding – we are talking about the past council

    Reply

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