Future Uncertain for R.I. Fire District; State Takes Over

The district returned a Pierce aerial because it couldn't afford the $97K annual payments.

But, in a nod to the board, he added, "the fire service cost has outgrown the taxpayers' ability to pay for it."

Hartford has been monitoring the Central Coventry situation on Chafee's behalf since January. He said that familiarity with the issues and the players, plus the extensive work already done by Land, made the job more solvable than it might seem from the outside.

"We are probably closer than most people think," he said.

Bookkeeping mistake

Fire districts are a remnant of mill-town Rhode Island, where villages created them to provide local fire protection. Today, Rhode Island has 42 fire districts in 14 towns. Of those, 33 have fire stations, 5 contract fire protection from neighboring districts and the rest provide other services, such as water or even running beaches. They have the power to levy taxes in their districts and bill for services.

One lesson from the Central Coventry case is that, along with firefighters and trucks, a fire district needs good accountants.

Central Coventry's trouble went public in October 2012, when, after the district's governing board missed multiple payrolls, Superior Court Associate Justice Brian P. Stern appointed Land, who oversaw the 38 Studios bankruptcy, to sort things out.

Land said the district's financial collapse was triggered by a bookkeeping mistake that built a $790,000-annual-shortfall into two successive budgets.

He said when the district's 2010-11 and 2011-12 budgets were submitted to voters, they overestimated the value of commercial real estate in the district by $217 million. If it had existed, the property would have brought in about $790,000 in revenue. But that property didn't exist, and the $790,000 didn't come in. By 2011-12, it was a $1.58-million deficit.

At the same time, the board made the financial problem worse by leasing a new fire truck, hiring more firefighters and signing a new contract with its union.

Liquidation order

In his Feb. 24 liquidation order, Stern denounced the district as "an elaborate Ponzi scheme." Rather than reveal the deficit, he said that "the board resorted to what has been quintessentially the 21st-century American thing to do. It took out a loan for a credit line with Centerville Bank to pay operating expenses and cut corners on its obligations to its employees."

"What brought down this fire district was not being open, honest and confronting a problem head on," he said.

Former board chairman Girard Bouchard Jr. could not be reached for comment.

Land and Stern persuaded the members of that board to resign and they were replaced in a special district election last spring. Fred Gralinski, the current board president, said the new board blames the district's union contract more than the old board's bad budgeting.

He said about 80 percent of the budget pays for too many firefighters who are paid too much for a small-town district such as Central Coventry.

Gralinski said the union has resorted to "bullying tactics" and has, through the contract, taken over too much of the management of the department. He said the board's difficult relationship with the firefighters union has evolved because the board is willing to stand up to them.

Board versus union

On its website, the board talks of replacing the district's ambulance crews with a private contractor and the current firefighters with a group of "paid to go" firefighters augmented by volunteers.

"There is going to have to be fundamental changes" if the district is to continue, Gralinski said.

David Gorman, president of the firefighters union and who started in the department 22 years ago as a volunteer, said the problem is that the board doesn't understand how a fire district is run and is coming at its job with eliminating the union as the main goal.

He said the union has offered concessions that would have fixed the budget, but the board rejected them without making counterproposals. Gralinski says the offers didn't go far enough.

"The problem is they have shut us off, Gorman said. "They have a different philosophy, a concept of how it should be done."