Providence Gets 30% Bonus Curbing $109,000 Retirees: Muni Credit

Providence was so close to running out of cash a year ago that it couldn’t pay for tires on police cars. This month, Wall Street lined up to lend to Rhode Island’s capital, shrinking its yield penalty 30 percent.

Providence’s path toward fiscal health went through the bank accounts of about 1,600 pensioners. They voted to freeze cost-of-living raises for a decade, a move that may be unprecedented, said Alicia H. Munnell, director of the Center for Retirement Research at Boston College in Chestnut Hill, Massachusetts. The deal helped Providence avoid the fate of neighboring Central Falls, which in 2011 became the first city in Rhode Island’s 222-year history to go bankrupt.