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Bankruptcy 'last resort' for Rhode Island city

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Rhode Island Gov. Lincoln Chafee said the move represents a "difficult" decision but that it's needed in light of Central Falls' "dire" financial outlook.

"We're not going with a Band-Aid approach," Chafee told The Associated Press. "We're going to tackle this, and that's a positive."

Central Falls, a 1.3-square-mile city of 19,000 residents about a 15-minute drive north of Providence, has $80 million in unfunded pension and benefits obligations and deficits of $5 million or more projected for each of the next five years. The city has found itself the subject of national headlines over its floundering finances and a high school so troubled that all its teachers were fired in one fell swoop last year, but eventually rehired.

Flanders said Monday that the city had irresponsibly entered into unaffordable agreements with retirees. Officials have said it was also hard hit by a loss of state aid and expected revenue from the Wyatt Detention Facility that never materialized. Flanders' predecessor as state-appointed receiver, Mark A. Pfeiffer, also cited a "culture of government" that allowed the fiscal crisis to grow.

The mayor, Charles Moreau, and City Council president, William Benson Jr., who were demoted to advisers after the state stepped in last year, have been critical of the receiver. They say it was clear long ago thatbankruptcy was the only option.

"Unfortunately this is the route we've got to go," Moreau said. "At the end of the day, fiscal stability is of the utmost importance."

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