of Cranston.
In what might be the most closely watched Cranston mayoral race in decades, two successful businessmen are vying to put the cash-strapped city’s fiscal house back in order.
Not surprisingly, the campaigns waged by Democrat Aram G. Garabedian, a long-time state legislator and area businessman, and Republican Stephen P. Laffey, a graduate of Harvard Business School who recently headed a financial services firm, have centered on digging Rhode Island’s third largest city out of its mountain of debt.
But while both Laffey and Garabedian have impressive business backgrounds, their campaigns differ markedly.
Laffey, a 40-year-old Cranston native who spent nine years at Tennessee-based brokerage and investment-banking firm Morgan Keegan – eventually becoming president of the $500 million company – has billed himself as a financial whiz kid who is more than capable of running the city’s $170 million budget.
“My background is in money. I watch money and I will budget your money,” Laffey told an audience of about 450 Cranston residents at an Oct. 1 debate at Cranston High School East. “This is what I do for a living. I watch nickels and dimes.”
Meanwhile Garabedian, 67, touts his combined 10 years of service in the state legislature and as a Cranston School Committee member at a time when Laffey was “out making his fortune,” as Garabedian said during the debate. Garabedian has campaigned as a cagey veteran of Rhode Island politics who – as president of Bliss Properties, co-managing partner of the Warwick Mall – has the business connections to build Cranston’s stagnant tax base.
“You call yourself a financial expert. Well I call myself an economic-development expert,” Garabedian chided Laffey during the debate. “I’m the candidate who knows real estate developers, who knows zoning issues, who knows industrial and commercial companies and who knows what this area is all about.”
Cranston’s fiscal meltdown came to a head earlier this year, when the city narrowly averted a state takeover of its books in light of the more than $200 million hole in the city’s police and firefighter pension fund. The deficit prompted dozens of policemen and firefighters to retire early in hopes of preserving their pension benefits. The city also is facing a budget deficit of an estimated $17 million.
Laffey has pounded away at his campaign theme: Everything is on hold until the city’s finances are fixed. He has outlined an eight-point plan to balance the city’s budget, starting with a “forensic audit” of the company’s books.
“We have to find out what happened to the money in order to get our bond rating up,” Laffey said. “We have to be able to show the bond-rating agencies what happened to all the money and how we’re going to stop it from happening again.”
His plan also includes conducting in-depth performance reports on every city department; installing an information system to better track finances and instituting a hiring freeze at city hall. But Laffey concedes that more-painful measures may be necessary. Among them: raising taxes, and, as a last resort, floating a debt-reduction bond.
Garabedian said the city’s fiscal collapse could have been avoided altogether had the city’s Republican administration listened to him when he first called for an audit in 1991. He also says he will press for a forensic audit of certain sections of the city’s books – although he notes that that would require an OK from the city council, and that forensic audits are expensive.
Garabedian vows to map out a three-to-five-year business plan for the city – advice he says he got from Moody’s Investor Service – in order to lift the city’s credit rating from junk-bond status. One element of that plan, Garabedian said, could be to “break down the walls” between city hall and the school district by consolidating some administrative services.
Garabedian also concedes that raising taxes is probably unavoidable, and issuing a low-risk municipal bond might be necessary. And he says that Cranston needs more state funding – aid that the city has been given short shrift over the years at the expense of other Rhode Island cities. Laffey also has cited the need for more state aid.
But Garabedian maintains that turning around the city’s fiscal crisis hinges on building the city’s relatively meager commercial tax base.
He cites the disparity between Cranston’s economic-development efforts and those of neighboring Warwick. Since 1970, Cranston’s commercial property value has grown from $311 million to $561 million. Meanwhile, Warwick’s has mushroomed from $445 million to $1.4 billion, according to the Rhode Island Public Expenditure Council.
“If we don’t raise and expand our commercial and industrial tax base, then we’re left with residential,” Garabedian said in an interview. “And there are a lot of elderly people who are just holding on, trying to pay their property taxes. We need to provide them some relief.”
Laffey says he will appoint an “economic czar,” someone who would take an inventory of the city’s available properties and then make “outgoing calls” to prospective companies. He says his experience in opening a number of new offices during his tenure at Morgan Keegan gives him a unique perspective of what growing companies are looking for. And Laffey wants to make community grants available to smaller businesses to help them pay for expansions.
Garabedian says the city doesn’t necessarily need to lure out-of-state businesses into Cranston – that’s the job of the legislature and the state Economic Development Corp., he says. Instead, Garabedian says he wants to help existing businesses expand while fostering new commercial development (he mentioned the Brewery Parkade site off Route 10 as ripe for new development) without cutting into Cranston’s quality of life or creating traffic problems around its “jewel,” Garden City.
As for Cranston’s business owners, who have grown tired of seeing their taxes creep higher only to seemingly disappear at city hall, they would like to see the city run more like, well, a business.
“Businesses are constantly having to cut back on their operating budgets in order to keep themselves afloat,” said Hannah Hodgson, president of the Cranston Chamber of Commerce. “I think the business community sees the city as having a lot of excess fat that could be cut.”
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