The city of Lawrence and its financial troubles have become an issue in this year's gubernatorial race. Independent candidate Timothy Cahill has called for an outside audit of the city's finances. And both Cahill and Republican Charles Baker say the state should take charge of the city by putting it into receivership or appointing a control board. But there are lots of questions about what that would really do.
Lawrence has raised taxes and laid off dozens of employees in the past year, but neighboring towns now say the city has gone too far. Lawrence has laid off so many firefighters that surrounding communities are having to bear the cost of fighting fires in the city.
The firefighters union says Lawrence should get more aid from the state to hire back some of the 23 laid-off firefighters. But the state is already giving more local aid to Lawrence than any other city.
This has led to a bitter dispute among some lawmakers. At a meeting last week — which was supposed to be about fighting fires — elected officials ended up in an argument about whether the state should step in and appoint a control board.
"There is no need for a control board now or in December, or in January, as we move forward."Robert Nunes, appointed Lawrence overseer
"I think the control board would have more ability to maneuver through this situation," said Republican Sen. Bruce Tarr. A control board would be able to "call people to the table" and "modify contracts," he said.
"No, they don't," responded Democratic Rep. David Torrisi. "You're being disingenuous to this whole room, Sen. Tarr."
There's widespread belief that a control board can rewrite labor contracts. Baker is in that camp.
"A receiver certainly has the capacity to void and renegotiate all kinds of contracts," he said by phone.
And he says that Gov. Deval Patrick should have been tougher in its oversight of Lawrence.
"Before the state put one dime into supporting it, the state should have put a far more aggressive and professional management structure in place to deal with it," he said.
But according to people involved in previous financial overhaul projects in Chelsea and Springfield, the state didn't have the power to change the terms of existing contracts.
"There's an urban myth out there that the Chelsea Receivership Act and the Springfield Finance Control Act allowed the control board in Springfield and the receiver in Chelsea to abrogate collective bargaining agreements and do whatever the hell they please," said Steven McGoldrick, the chief of staff to the receiver in Chelsea. "That's not true. What we did in Chelsea, we still had to negotiate. Whatever they did in Springfield, they still had to negotiate."
But the receiver did have more leverage in Chelsea, in part because the unions believed bankruptcy was imminent.
That's according to Eric Kriss. He was assistant secretary of Administration and Finance for the Weld administration, at the time Chelsea went under state control.
"At the time that this was done, there was a general feeling that bankruptcy was a true and likely course of action," he said. "The threat of bankruptcy and bankruptcy filing, which would have of course voided the labor contracts, was enough of a threat to get the labor unions to negotiate in a relatively straightforward manner, compared to the usual state of affairs."
Kriss says things changed by the time Springfield went under state control.
"I think the labor unions really caught on that this was a very unlikely course and the threat of bankruptcy was correspondingly reduced," Kriss said. "And as it was reduced, the labor negotiations would become protracted."
But even without the threat of bankruptcy, a receiver does have some advantage.
Many people involved in the takeover of Chelsea and Springfield say that because they came in as outsiders, they were much freer. They didn't have to worry about running for election, and personal relationships didn't get in the way of cost-cutting.
The Patrick administration says that, for now, Lawrence is moving in the right direction.
The administration appointed an overseer, Robert Nunes, to monitor the city's finances. Nunes has the power to call for a control board or receiver if the city does not balance its books. But he doesn't see the need to do it.
"The city has a balanced budget," he said. "I'm confident and optimistic that the Bureau of Accounts will certify the city's tax rate in December. Again, so there is no need for a control board now or in December, or in January, as we move forward."
For now, it's up to the city of Lawrence and its unions to find a way out of its mess.
This program aired on August 24, 2010.