(MSNBC) Central Falls, RI – The city of Central Falls, Rhode Island – one of a handful of U.S. cities and counties facing fiscal collapse in the wake of the economic recession – has filed for bankruptcy.
The Chapter 9 bankruptcy filing marks a symbolic blow as state and local governments struggle to pull themselves out of the recession.
The smallest city in the smallest U.S. state made the filing Monday as it grappled with an $80 million unfunded pension and retiree health benefit liability that is nearly quadruple its annual budget of $17 million.
“A bankruptcy filing is sort of an endgame over years and years of economic distress, so it’s not something your typical U.S. town or city is likely to experience anytime soon,” he said.
There have been only 624 municipal bankruptcies under Chapter 9 of the U.S. Bankruptcy Code since 1937, with five occurring last year, according to James Spiotto, a municipal bankruptcy expert at the law firm Chapman and Cutler.