Administration counters Corrente claim city headed for bankruptcy

By John Howell
Posted 9/15/16

Democratic mayoral candidate Richard Corrente says bankruptcy is in Warwick's future and gives incumbent Mayor Scott Avedisian an F" on his performance. "Warwick has about three years left before it will be forced to file for bankruptcy."

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Administration counters Corrente claim city headed for bankruptcy

Posted

Democratic mayoral candidate Richard Corrente says bankruptcy is in Warwick’s future and gives incumbent Mayor Scott Avedisian an “F” on his performance.

“Warwick has about three years left before it will be forced to file for bankruptcy. If our liabilities double in 2017, 2018 and 2019, Warwick will owe more than it will ever be able to pay back, a whopping $6.2 million!” reads an email to the Beacon.

That’s not the way City Finance Director Ernest Zmyslinski sees it, or for that matter Standard & Poor’s, which affirmed the city’s AA- bond rating in July. Mayor Scott Avedisian branded allegations inaccurate, taking offense to Corrente’s claim that he (Avedisian), in response to City Council and taxpayer demands for an outside audit, hired an internal auditor who he fired a few months later without releasing the findings to the public. It was City Council President Donna Travis and Council Finance Committee chair Camille Vella-Wilkinson who hired an auditor that resigned after several months in the wake of controversy. Members of the council questioned why they had not voted on her selection.

Corrente arrives at the conclusion Warwick could be next in the string of municipal bankruptcies based on the city’s financial reports using the accounting standards set by the Government Accounting Standards Board. He finds that city assets have grown less than 1 percent to $458.5 million in the last 10 years, while during the same period liabilities “have exploded” from $310 million to $770 million.

Zmyslinski sees where Corrente pulled the $458.5 million from city records, but adds the total does take into account another $30.7 million on the asset ledger. He doesn’t find fault with the $770 million liability, which actually is about $2.7 million more, according to the account. But Zmyslinski points out that the “explosion” of liabilities Corrente is referencing actually has been there like “a homeowner’s mortgage” for years. It is now being shown on the municipal balance sheet as required by full disclosure regulations. What’s more, these liabilities – consisting of estimated unfunded pension and post-employment benefits – are not compounding annually as apparently Corrente did in his analysis.

“He is taking the big increase [the first year the city listed the liabilities] and saying it is going to happen every year.” Likening unfunded obligations to a home mortgage and car loan, Zmyslinski said, “it’s not all due and payable today as it is under his analysis.”

Corrente said he hopes Zmyslinski is correct, but he thinks he’s not. He said the city keeps adding to its liabilities.

“There’s absolutely no reason that it’s not going to continue,” he said Tuesday.

Asked why the city has received a favorable bond rating if the situation is so dire, Corrente said, “They haven’t caught up with it. They will. They must.”

In rendering a rating for $5.15 million in school bonds sold in July, S&P generally concluded the city in a strong financial position. The rating agency considers the city’s economy “very strong” and that the city is adequately managed by “conservative budgeting practices with a history of better than budgeted results.”

While S&P notes these strengths and gives the city an AA- rating, putting it in the lower tier of its higher ratings, it terms the city’s “large pension and OPEB obligations” a “credit weakness.”

But the agency isn’t raising a red flag. Their outlook is stable, certainly not the bankruptcy Corrente forecasts.

“While we believe pension and OPEB costs will likely remain a long-term credit concern, we expect the city to continue to manage these costs while maintaining stable finances and improving reserves,” reads the report.

Asked if Corrente’s forecast would change his support for the Democratic candidate, Ward 5 Councilman Ed Ladouceur said, “He’s the endorsed candidate. I’m supporting Richard Corrente for mayor, but it doesn’t mean I agree with every position.”

Ladouceur said he would want to see “the backup information” to Corrente’s claims.

“I’m not interested in pointing fingers at anyone,” he said. Ladouceur said he is interested in learning of solutions to problems.

Corrente said his solution is to cut taxes so as to attract more businesses and residents to the city. With more business and taxpayers, he said individual tax costs would go down.

“My whole platform is to attract people to Warwick,” he said.

Comments

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  • Justanidiot

    it is a rigged system mayer corrente. expose all the rigging and you will be hailed as a godsend and be lifted up to be the next governor of road island and after that president of the united steakes.

    Thursday, September 15, 2016 Report this

  • CrickeeRaven

    Yet again, the claims made by the Democratic candidate for mayor are proven false. The city is not on the verge of fiscal collapse and is, in fact, following legally-mandated reporting standards. The current mayor did not hire or fire an internal auditor, and bond rating agencies agree that Warwick is on firm financial ground.

    It may be too much to ask for this to be the final attempt by this candidate to push false narratives about the city while also claiming to want to "attract people to Warwick," as he has shown no willingness in the past to answer for the proven inaccuracies in his past statements [the value of his property assessments, the state of the business sector in Warwick, and the ability of a municipal official to get involved in school contract disputes are the most prominent of his now-discredited campaign claims]. How disparaging the city's operations with erroneous statements and making impractical claims about cutting taxes and spending would cause people to move to Warwick is a complete mystery.

    Credit to the article writer for joining the thousands of voters in Warwick who already know this candidate's claims to be untrue, and seek to hold him accountable for his false statements.

    Thursday, September 15, 2016 Report this

  • Scal1024

    Rick, let's say this is accurate (which it is total garbage), your answer to that is to pay 50% of seniors and veterans car taxes? You also claim you'll "cut taxes", while freezing permit fees and handing out rebate checks to businesses and new homeowners? Where will the revenue come from??? Don't tell me cut spending because I can't take the laughter.

    I'm surprised the beacon even printed your conspiracy theories...although now the voters will see what readers on this site have seen for 2 years: there is no substance to your campaign. Everything is empty words"cut taxes, cut spending", I'm surprised you didn't run on making rocky point an amusement park again, or free kittens for everyone the way you promise people the world. I find it hilarious that you can't tell me any specifics about any of your plans, yet you know for a fact the city is going bankrupt in a few years. More proof that you don't have any idea what the overall cost will be.

    Since you are worried about the city's finances Rick I have to ask...in the interest of saving money what concessions would you like to see the teachers to make in this next contract? It's getting harder to take this campaign seriously when out of one side of your mouth you talk about liabilities, and the other side tells folks we're giving away the store. It just doesn't add up Rick, and no amount of pandering will save you.

    Thursday, September 15, 2016 Report this

  • PaulHuff

    Mr. Corrente,

    Although your "whole platform is to attract people to Warwick"....your platform is based upon lies and half truths. You are chicken little and the sky is not falling.

    November can't get here fast enough so you can fade away into obscurity.

    Friday, September 16, 2016 Report this

  • richardcorrente

    Dear Justanidiot,

    Thank you for your kind words.

    I will do my best and I have no interest in being anyone but the Mayor of Warwick. Again, thank you for believing.

    Dear Chickee, Scal, and Paul,

    My information comes from the City of Warwick Financial Reports as regulated by the Government Accounting Standards Board.If you disagree with those facts, that is your choice, but don't yell at me. Yell at them.

    Fact: Warwicks' debts DOUBLED from 2005 to 2015.

    Fact: Avedisian was Mayor throughout that time.

    Fact: They almost doubled again from 2015 to 2016. (from 388 million to 770 million)

    Fact: He was Mayor then too.

    Fact: Ernie Zmyslinsky compared it to a "homeowners mortgage". (Ernie, what mortgage balance DOUBLES in one year???)

    Fact: Ernie says "it is not all due and payable today!" He's right but I was not referring to the "due date" I was referring to the "total amount due" that DOUBLED. As finance director for Warwick, I would hope Ernie knew that.

    Fact: Warwick owes $770 million and if it doubles again this year, like it did last year, Warwick will owe $1.5 Billion. Do the math. It isn't what any of us wants to believe, but these are the FACTS.

    I have a plan to attract new taxpayers that will reduce the taxes on the rest of us, with tax rebate checks for new home buyers and new businesses, a moratorium on building permit fees to stimulate construction that will add new tax revenue forever, a voluntary pension buyout program that will provide a win-win for retirees as well as the City, the hiring of a grant writer like Central Falls did, a hiring freeze which will make the jobs of present employees secure and when we have to hire a new employee, a lower starting salary (starting with the Mayors). Read my platform at www.correntemayorwarwick.com.

    Don't bother looking for Avedisians plan. There isn't one. He has raised your taxes every year for 16 years in a row. If you think that is a good idea, vote for him. If you like my plan, vote for me. Fair enough?

    Enjoy Autumn.

    Richard Corrente

    Endorsed Democrat for Mayor

    Monday, September 19, 2016 Report this

  • Kammy

    Here is why your math is faulty. You said:

    Fact: Warwick owes $770 million and if it doubles again this year, like it did last year, Warwick will owe $1.5 Billion. Do the math. It isn't what any of us wants to believe, but these are the FACTS.

    No it won't double next year. That would be like saying your 200K mortgage will double next year. That won't happen. You will continue paying on the mortgage but you won't see it double each year. You had your answer in the contents of the article but either chose to misunderstand or truly don't understand how this works. They are not compounded annually.

    "... these liabilities – consisting of estimated unfunded pension and post-employment benefits – are not compounding annually as apparently Corrente did in his analysis."

    I think that you take information and try to make it work in your favor. One of the biggest challenges on determining who you will vote for is you have to put your faith in someone that you know or someone new that you don't know. You can have all the plans in the world to help the city but until you are actually working in City Hall we don't know if you can make it happen. It is asking a lot from me as a voter to choose you as you do not have any experience in running a city. It is asking even more of me as a voter to choose you after I have read Ad nauseam your comments here on the Beacon. I said it before and I will say it again - you haven't helped yourself by responding on these boards.

    Tuesday, September 20, 2016 Report this

  • Scal1024

    Rick, I could say I'm going to cut taxes and spending too, then I'll increase services, then I'll build new schools and give everyone a Chromebook (parents too). If you don't have any idea how to pay for it or what it will cost then what good is it??? Once again, more empty rhetoric and foolish promises that you know you can't keep.

    You keep talking about the mayor having no plan... NEITHER DO YOU!!!! Your website is a bunch of talking points derived from the "beginners guide to politics", where you just talk in quick sound bites hoping people will fall for this garbage.

    When are you going to be honest with people in this city??? Stop lying and be real...

    You don't have any idea (whether you call it a "moving target" or not) what this will cost, which means you dont know if you have the revenue to pay for any of it, which means you CANNOT honestly say you'll be able to cut taxes, which means you are selling people something that you know is patently FALSE. You call it a "plan" yet there is not one single number to back any of it up.

    Keep spreading the false narratives Rick, taxpayers see right through it.

    Tuesday, September 20, 2016 Report this