Mayor leads RI capital city out of financial peril

PROVIDENCE, R.I. (AP) -- Angel Taveras knew he'd be inheriting bleak finances when he became Providence mayor in January 2011, so he reached out to union leaders right after his election with a message meant to lay the groundwork for future concessions: I'm going to need your help.

It turned out he needed a lot more help than he thought. Taveras soon learned that Rhode Island's capital was facing a worse-than-expected $110 million deficit that he called a "Category 5 fiscal hurricane" and warned could force a municipal bankruptcy.

A little more than halfway through his first term, the 42-year-old Democrat — a possible candidate for governor in 2014 — has walked the city back from the brink in a state that has struggled for years with one of the highest U.S. unemployment rates.

He cut spending across nearly every city department, closed schools, shaved 200 workers off the city payroll, and raised taxes and fees. He extracted millions more in voluntary payments from the city's tax-exempt organizations, including Brown University and its hospital systems. And he negotiated settlements with unions and retirees over an unpopular 10-year pension freeze and other cost-saving benefits changes, fending off costly litigation.

"I think you build trust. You do that through open communication. You do that by being honest with each other," Taveras said of his approach to governing and negotiation. "I try to put myself in the other person's shoes. I think that that helped a lot."

Superior Court Judge Sarah Taft-Carter ruled in March that the agreements the city reached with the unions and retirees are fair and reasonable, and she is expected to lend the court's final approval April 12.

Taveras has generally won praise for his approach to the pension overhaul, which the city says has reduced its unfunded liability by $178 million, from more than $900 million, and which along with Medicare changes is saving Providence $18.5 million in the current fiscal year.

A similar public retirement system overhaul, led by state Treasurer Gina Raimondo and approved by the General Assembly in 2011, unfolded much differently: It's tied up in legal wrangling, with unions and retired government workers calling the changes unconstitutional, unfair and a breach of contract.

The son of Dominican immigrants and Providence's first Latino mayor, Taveras finds himself one of the best-liked politicians in the state, with a difficult choice to make later this year — whether to seek the governor's office. That could pit him against Raimondo in what would be a hard-fought Democratic primary.

Taveras' relatively limited national profile got a boost recently when Providence bested more than 300 other cities to win the $5 million top prize in a Bloomberg Philanthropies contest with a plan to improve poor children's language skills. He has made improving schools a signature issue, holding himself up as an example of how education is the way out of poverty. He likes to say he went from Head Start to Harvard.

Last year, Taveras helped President Barack Obama with outreach to Latino voters during the re-election campaign, making trips to New Hampshire and doing interviews on Spanish-language radio in Florida, California and Colorado.

With his slight frame and soft manner, Taveras, who has a 15-month-old daughter, comes off as bookish. Cranston Mayor Allan Fung, who went to high school with him and is a friend, said some misinterpret the mayor's tendency to do things quietly.

"A lot of people can mistake his outward demeanor as a lack of toughness, but that's not it at all," Fung said. "He really takes a methodical approach on issues."

Reflecting on his time in office, Taveras says he regrets how he handled the issuance of firing notices to nearly all of Providence's almost 2,000 teachers two years ago — a move that earned him bad national press and the ire of teachers and their union leaders, who dubbed the move "insane." While he said at the time most would not be fired, he insisted he had to take the step to give the city financial flexibility and because of a state-imposed deadline for layoff notifications.

"It's still something I'm working through with a lot of teachers," he said.

Paul Doughty, president of the Providence firefighters union, calls the mayor's tenure a "mixed bag." He felt burned when Taveras came back seeking pension concessions after he had already renegotiated their labor contracts. Later, Doughty was angered that the mayor and council passed pension overhaul legislation in the middle of negotiations, effectively resetting them — a leverage-creation tactic the union leader understood but did not appreciate.

"We were there in good faith," he said.

Still, Doughty describes Taveras as a consensus builder and says he and his team were ultimately good negotiating partners.

"No ultimatums, no grandstanding, no surprises," he said. "It was all really earnest and honest negotiations at the table. There was a lot of give and take. They came in almost with an academic bent to them as opposed to a political bent, which was much different than the previous administration."

City Councilman David Salvatore, who worked closely with the mayor on the pension overhaul, said the conversation has shifted in Providence since Taveras took office.

"Two years ago we were talking about a city in peril. Today, through the collective efforts of the administration and the city council, we're discussing ways to grow our local economy," he said, referring to the mayor's new 20-point economic development plan. "The naysayers, five to 10 years ago, would say you'll never get pension reform passed the way you did in 2012. I think the outcome is a clear indication of this mayor's leadership. The scorecard speaks for itself."

While the city's finances have markedly improved, Taveras says there is little room for error in the months ahead. By his estimation, Providence hasn't turned the corner yet — but it's about to.

"People have to believe," he said. "Confidence matters. We need to make sure we have that confidence."