Is the state takeover of Central Falls constitutional?

A number of people – including Wyatt Detention Center Chairman Bruce Corrigan, local ACLU chief Steve Brown, and blogger Justin Katz – are raising questions about the new state law that was quickly enacted in June after Central Falls’ mayor and city council got a judge to put the city into receivership (a sort of state-law bankruptcy) because of its precarious finances.

Here’s Corrigan’s complaint:

Article XIII of the Rhode Island Constitution is entitled “Home Rule for Cities and Towns” for a reason — to preserve rights of cities and towns and their citizens. And Section 4 of Article XIII is entitled “Powers of General Assembly Over Cities and Towns” for a reason — to be very clear as to what the state can and cannot do in connection with municipal matters and citizens’ rights.

That section of the constitution states that the General Assembly only has “the power to act in relation to the property, affairs and government of a particular city or town provided that such legislative action shall become effective only upon approval by a majority of the qualified electors of the said city or town voting at a general or special election.” I do not remember such an election being held in our city in connection with such important constitutional rights.

The question is a pretty fundamental one: Was it constitutional for the new law to allow Gov. Carcieri to appoint retired judge Mark Pfeiffer as Central Falls’ receiver, giving him control over the city’s finances and its government, without any input from voters there?

The Carcieri administration’s lawyers (and Pfeiffer) think so.

To back that up, they cite a 1994 Rhode Island Supreme Court decision, Marran Jr. v. Baird, in which the court said the Sundlun administration had acted constitutionally when it gave control of West Warwick’s finances to a budget and review commission in July 1993. The governor’s office took action after the town’s bond rating was downgraded to junk status because it was in danger of defaulting on its debt.

The full text of Justice Victoria Lederberg’s decision isn’t online, but I got a copy of it. Lederberg found that the budget commission law was constitutional for a number of reasons:

  • it didn’t single out an individual municipality, but rather applied to all of them;
  • it didn’t allow permanent changes in the structure of a municipality’s government;
  • it dealt with something that matters to all of Rhode Island, because “the fiscal collapse of a municipality can affect the entire state’s financial interests”;
  • it limited the circumstances in which the commission could intervene in local affairs, and to what extent they could do after acting.

I’m not a lawyer, but it seems at least plausible that this ruling could support the Central Falls takeover. One fact that might hurt the state’s case, though, is the decision’s statement that the law

discourages administrative abuse by requiring that three public members of the affected community sit on the commission, by limiting the commission’s duration to no longer than “the end of the fiscal year,” and by requiring that the commission comply with the open-meetings and open-records laws.

If the Office of the Receiver in Central Falls is seen as lacking transparency or community input, that could pose a problem – which may be why Pfeiffer promised this week to hold meetings and continue briefing local officials about his thinking and his decisions.

Either way, state officials acknowledge Central Falls’ situation is far from ideal – but they also say they were forced to act after the city’s leaders freaked out the bond markets with their original receivership petition back in May.

Update: Just noticed that one of the commenters at Anchor Rising said he has no sympathy for Central Falls because its residential property tax rate is $10.54 per $1,000. That was true at one point, but not anymore: the city’s tax rate in 2010-11 is more than double that, $21.14 per $1,000, even after accounting for a $33,655 homestead exemption (and including the 10% surcharge the receiver is levying). I misread the chart; time to go to the eye doctor. The rate’s still not $10.54, though – the R.I. Department of Revenue says the effective rate this year is $15.02 per $1,000 for a single-family homeowner after accounting for the city’s $33,655 homestead exemption and the 10% surcharge levied by the receiver. (It’s $21.14 before the exemption.)

Update #2: I asked the ACLU’s Steve Brown whether his organization would challenge the new receivership law in court. He just e-mailed me back, and here’s what he said:

We have received complaints from residents of the city, but we are still having the legal research done on possible grounds for filing a challenge. Since the receivership law is such a unique statute, the research is taking a bit longer than expected.

I hope to know within about two weeks what plans we might have in terms of a legal challenge.

2 thoughts on “Is the state takeover of Central Falls constitutional?

  1. Central Falls tax rate last year was in fact $10.78 per thousand.

    The $19.22 rate went into affect this year because the 2009 revaluation dropped property values by 44% s0 its still the same rate.

    Who else has had a revaluation that lowered property values by that much?

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