The Price of Bankruptcy – Be careful of what you ask for

Thursday, April 30, 2009
By Cary Shuman

Both in the past and during the current override debate, some of those who are opposed to the idea of overrides have suggested that the town simply declare bankruptcy and let the state come in and take over.

That’s what happened to Chelsea about 20 years ago when that city was placed into receivership under a receiver appointed by the governor. The result is that Chelsea did get its financial (and political) house in order and emerged a better city.

However, a key component of the receivership was that taxes and fees (such as a flat monthly trash fee) were imposed by fiat by the receiver. Once a municipality goes into receivership, all of the rules, so to speak, go by the boards and the receiver is given broad power to fix the problems that exist.

No doubt, the anti-override crowd was dismayed when an impartial observer from the State Department of Revenue informed the Town Council that Winthrop does not have a spending problem, but a revenue problem.

But that is the simple fact. And the reality is that if Winthrop ever were to go into receivership, the first thing the receiver would do is to impose a trash fee and raise the tax rate.

So to the members of the anti-tax crowd who think that bankruptcy for the town might be a good idea, our only comment is, “Be careful what you wish for, because you just might get it.”

If we can’t provide for an adequate school system, a town library, a senior center, and sufficient public safety forces, then the state will be more than willing to do it for us.

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