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MSNBC TV
updated 7/27/2013 10:45:29 AM ET 2013-07-27T14:45:29

Detroit's financial problem sheds light on cities around the nation. Mayor Leo Fontaine of Woonsocket, R.I., talks with Alex Witt about his city's financial crisis.

Detroit’s bankruptcy filing is shedding light on other cities in financial crisis across the nation. Mayor Leo Fontaine of Woonsocket, R.I., explains his city’s budget deficit and its current economic condition.

“We have a financial crisis that was brought on primarily through a number of cuts from state funding over the last few years compounded with pension costs and health insurance costs,” he said.

Bankruptcy was on the table for Woonsocket last year, but the city has actually moved further away from filing. Fontaine attributes this to a “pretty aggressive but reasonable five-year plan that addresses all of our concerns.”

When MSNBC’s Alex Witt asked the mayor about the role of state and federal governments, he pointed to the necessity of taking an overall look at bankruptcies in cities and towns across America.

In regard to pensions and unions, Fontaine added, “I think that there is a change that needs to take place.”

Video: Woonsocket, RI suffers from major deficit, pension issues

  1. Closed captioning of: Woonsocket, RI suffers from major deficit, pension issues

    >>> credit rating agency moody's says detroit bankruptcy filing could prompt other cities to follow suit if the motor city can cut pension obligations. since 2010 eight municipalities declared bankruptcy as it deals with a large budget deficit . joining me now is mayor of rhode island and mayor fontane, thank you for joining me. can you explain what your financial crisis is.

    >> brought on a number of cuts from state funding over the last few years compounded with pension costs and health insurance costs similar to many communities that are facing problems throughout our state and throughout our country.

    >> i understand you said last year that bankruptcy is on the table for you. are you any closer now?

    >> i would say, no, we actually have done a pretty decent job on putting together a reasonable five-year plan that addresses all the concerns we have and hopefully after the end of the five years will put us on a solid footing and avoid cobank kaeps all costs. i think all the communities that are falling into communities are a wake-up call call for states like rhode island and the country as a whole. we have to start looking at this because pushing the problem down to the cities and towns where it most affects the people and their day-to-day lives isn't the answer. i think there needs to be a more overall look at the bankruptcy and how to help cities and towns and i don't see that happening as much as it should be.

    >> one thing that has been a huge problem for detroit is the negotiating over the pensions and all retiree benefits. this is something you have been negotiating with your own unions. are pensions and unions still viable in the modern economy?

    >> you know, i think that there's a change that needs to take place. we can no longer afford the same thing that we did and these contracts and promises that were made years and decades ago are all coming home to cities like us now. when we negotiate and we have been active and unions have been very cooperative and we reached an agreement with a majority of them at this point. at the same point, we're talking with retiree groups and we are hoping we're positive with them and, obviously, not everybody is happy with this. we are doing everything we can to lessen the burden but clearly things have to change within those areas.

    >> we'll keep an eye on things from your perspective.

    >> thank you very much.

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