Bannon Made Fiscal Overseer in East Providence

To get East Providence's balance sheets on track, the state Department of Revenue appointed a fiscal overseer on Monday.

Major Steven Bannon of the state police will help forge a sustainable five-year budget deficit reduction plan, announced Rosemary Booth Gallogly, director of the state Department of Revenue, during a press conference held at city hall.

"Collaboratively we'll come up with a plan to resolve the issues here," Bannon said.

Due to outstanding school department debts to eduction vendors, including Meeting Street and , and mounting pension plan costs, state officials said intervention is imperative. The city is paying about 48 percent into the pension plan's actuarially required contributions (ARC). According to Finance Director Ellen Eggeman, 60 percent is the minimum amount required.

State advisement will help halt the decline of the city's bond rating, Gallogly said. Immediately after the press conferences concluded, officials invited Gallogly and Maj. Bannon to join a call with Moody's.

The appointment of a fiscal overseer is the first step of three under the 2010 Fiscal Stability Act. State officials could appoint a budget council if a fiscal overseer does not prove effective. The last step would be declaring East Providence to be in a state of receivership.

Gallogly said the major was an obvious choice as he was already in house and has experience in finances. Working in conjunction with the council, Bannon is required to approve city expenditures that exceed $25,000 and any employement contracts. The school department's teacher contracts are under negotiation.

After 120 days, the major will draft a report on East Providence's progress. According to the city manager and finance director, they are "optimistic" that the city can turn its financial woes around.

Gov. Lincoln Chafee, who attended the press conference said said the "time to act is now," noting he is concerned for the financial heath of other muncipalities such as Central Falls, West Warwick, Woonsocket and Pawtucket. East Providence is the second municipality after Central Falls to have a fiscal overseer appointed by the state.

"We're concerned for all of them," he said.

A final working document was submitted to the state on Nov. 10, according to City Manager Peter Graczykowski. The plan includes a fiscal year 2011-2012 school department budget deficit reduction from $7,250,728 to $3,242,317.

The city council will meet on Tuesday, Nov. 15, to consider additional deficit reduction measures, including further city consolidations, use of previous year surplus, elimination of services, a one-time supplemental tax increase and additional school department reductions, including cuts in educational supplies.