The Hummel Report

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Fiscal Fallout

Nearly three months after Democrats trounced a Republican-led Town Council on Election Day the question lingers: what is the financial future of East Greenwich? Depending on who you talk with in town: EG is on the brink of a financial disaster that can only be averted by significant structural changes - or local government is on solid footing with some challenges ahead. This week Jim Hummel sits down with some of the major players who had a front-row seat for a tumultuous 18 months at Town Hall that ended with a total flip of the council at the polls.

 

SCRIPT:

 

During a rare Saturday morning meeting in December the newly-elected East Greenwich Town Council delivered a promise it had made repeatedly on the campaign trail last fall: to fire controversial town manager Gayle Corrigan.

It marked the end of 18 tumultuous months. But now - three months after Election Day - the question lingers: what is the financial future of the town?

Corrigan: “The town of East Greenwich is not bankrupt today, but it is trending this way. And the definition of bankruptcy, of course, is not being able to pay your debts as they come due.”

Schwager: “I feel that we’re on very solid footing because we now have the ability to look at the finances objectively and make adjustments, based on good information that we’re getting.”

That is the picture emerging from interviews over the past several weeks with key players who had a front-row seat for the action at Town Hall. It included lawsuits, dozens of union grievances and unfair labor practice complaints, open meetings violations, ethics complaints, boisterous town council meetings and ultimately an overwhelming victory for Democrats, fueled in part by a firefighters union that felt unfairly targeted.

Schwager: “The community was not happy with this council and the way they conducted business and they became more and more engaged over time.; They didn’t like seeing East Greenwich on the front page of The Providence Journal.”

Mark Schwager, the lone Democrat and only holdover from the last Republican-led council, is now leading four other Democrats who have never held elective office. Schwager, who has served on the council off and on for eight years, said 2018 was the first time he could remember five Democrats on the ballot for a council race. The slate got a big boost from a reinvigorated East Greenwich Democratic Town Committee - and from union political action committees in town and other parts of Rhode Island.

How big? A Hummel Report review of campaign finance reports shows the Democratic Town Committee received nearly $31,000 in contributions during the 2018 election cycle, including $3,445 from eight separate union PACs across Rhode Island. By comparison, during the 2016 election cycle, the committee received a total of $4,000, including $100 in PAC money. In 2014 it was $1,525 total with no PAC dollars.

The East Greenwich Firefighters Association funded mailers that targeted the Republican council and Corrigan, who had been brought it to figure out why the School Department was running a deficit, then turned her attention to the Fire Department and escalating overtime costs.

In her first public comments since being fired as town manager shortly after the new council took, Corrigan talked about her tenure in East Greenwich and the election that effectively ended it on December 1st. And about the firefighters.

Corrigan: “They ran an amazing ground game in town. It’s actually fascinating in terms of how much time and money went into flipping this council.”

Schwager: “We had become kind of labor central to some extent, because many of the labor unions were watching what was happening in East Greenwich.”

Corrigan was only planning to be in East Greenwich for six months.

In the spring of 2017, the town council asked Corrigan’s company, Providence Analytics, to find out why the School Department was running a deficit. For decades this town of 13,000 boasted  top-notch public schools and had been running surpluses.

Corrigan had worked on the Central Falls bankruptcy with Robert Flanders and helped restructure the bankrupt Central Coventry Fire District, where she remains district manager. She had a history of being called in when most places were hitting rock bottom and some in East Greenwich resented comparisons of their town to Central Falls.

Corrigan: “The money has to come from somewhere and one of the problems is that East Greenwich has the least amount of state aid for its schools, but at the same time, like anywhere else, they’re capped at a 4 percent tax increase. So you can’t really tax your way out of it, the math actually after awhile doesn’t work.”

After looking at the schools, Corrigan - who eventually would be hired as town manager - turned her attention to the East Greenwich Fire Department, which came under the town’s wing in 2013 after being one of the oldest independent fire districts in the country. Corrigan said a doubling in overtime in a short period of time was a huge red flag.

Corrigan: “Typically, when it was a district, firefighter overtime ran anywhere between $400,000 and $500,000. And that’s very typical for something that size of a fire department. It wouldn’t raise any issues. This year it’s projected, and it’s on trend to go to $1.2 million.”

That, she says, is because the union negotiated eliminating a ‘floater’ position and brought a handful of so-called lateral hires - at a higher salary - over from fire districts in Coventry.

 

Corrigan: “In East Greenwich the contract had changed, without really anyone really understanding how it was changing, and there had been some secret side deals with these lateral hires, so obviously money was the biggest reason. Where in Central Coventry, probably the highest paid firefighters, and that’s somebody doing a lot of overtime, barely breaks $100,000. Right now in East Greenwich, those lateral hires who might have been in the $60,00 of $70,000 range are now in the $130,000 range.”

Corrigan wanted to change the work shift to three platoons and 56-hour work weeks to cut down on the ballooning overtime, something North Kingstown had done successfully several years ago - but had to wait until the contract expires in June.

Corrigan: “This is the exact reason why there was such a big - especially on the part of the firefighters - there was the big push to flip the council, because the firefighters knew that if I were still the town manager and if the Republicans were still the council members that I might have made these structural changes to bring the town back to fiscal stability.”

Schwager: “The overtime was the major red flag that attracted the attention of the new council that came on in 2016. They started the narrative that there was a financial crisis building in East Greenwich; the narrative that we needed to make very dramatic changes in the way we ran our finances or we would end up in serious financial distress very quickly.”

Henrikson: “There’s always going to be overtime in the fire department, but to eliminate the floater, somebody was hoodwinked down there at the at Town Hall.”

Peter Henrikson retired as fire chief in 2013, after three decades as a firefighter. Henrikson, a former union president, said things changed within months of the district becoming a town department. He decided to leave after the union took a no confidence vote in him.

Henrikson: “I still to this day believe the union did not want me to forge a relationship like that with the Town Council. They saw this as their golden opportunity to start fresh, do anything they could for me to leave so they could get someone to replace me and maybe hoodwink them in a couple of areas, which I believe has happened, and now look where we are.”

Then Corrigan was hired to take a deeper dive into the books.

Henrikson: “She hadn’t even gotten here yet and they were on TV, the union president saying she was fired from here , she got in trouble over there. He was already slinging the mud before she’d even walked into Town Hall.”

Hummel: “Because they saw what they’d done in Central Falls, they saw what happened in Central Coventry….”

Henrikson: “Correct. Yes, and they were scared to death that those things could happen here. And the single biggest one was the three platoon system.”

The union would file dozens of grievances and unfair labor practices against the town. Union president, William Perry, did not respond to our repeated requests for comment.

Henrikson: “What they said was the town was spending hundreds of thousands of dollars in legal fees for lawsuits, and grievances all because Gayle Corrigan was taking them to task. They made her out to be this union hater - she’ll tell you she’s not a union hater, she’s a financial whiz when it comes to budgets and she could see where the money was being spent and where structural changes needed to be in East Greenwich to straighten that stuff out. From the union side they’d go out and tell everybody look what she’s costing you.”

Schwager acknowledges the overtime in the fire department is a problem, but he said the previous council’s approach was counterproductive.

Schwager: “It made a negotiated settlement more difficult, because it drove the parties further and further apart. The reality is that eventually you have to negotiate because in Rhode Island we have binding arbitration.”

Schwager also said a council decision to hold the line on taxes for the first time in years, while facing financial difficulties,  made no sense to him.

Schwager: “It doesn’t square with the narrative that was being put out. The narrative was: the town is facing severe financial problems. And we’re at risk of bankruptcy and we could be the next Central Falls. That spending is out of control. And then the remedy is to cut taxes. It makes no sense. It’s no fiscal conservatism. It’s not fiscal stability, it’s fiscal malpractice.”

Hummel: “What was the biggest mistake during that time period?”

Schwager: “I think the approach to government, how you run municipal government. The way I saw that group, they looked like they were instituting a corporation takeover. A new board of directors came in, they hired a new CEO, which was the town manager, and they approached it as if this were a company in receivership and that they had the authority to institute unilateral changes.”

So where does the town stand? In this case, where you stand, depends on where you sit.

Corrigan: “It’ll be very interesting to see how these decisions, which are frankly short-term political decisions, how they have long-time effects. They won’t be seen today, or next month or even next year. They’re really going to be seen two, three, five years out. And five years from now, is East Greenwich going to be the town it was five years ago?”

Schwager: “I’m excited. I’m optimistic, but I’m realistic and it’s a difficult process that we’re going through. There’s a lot of challenges. But we’ve got good town employees, we’ve got a good council that can work together, we have an engaged community. And we have the resources, East Greenwich is such a lucky place, we have the resources to address our problems.”

In East Greenwich, Jim Hummel for The Hummel Report.