STEVE INSKEEP, host:
Now to a financial crisis in this country, where many towns and cities are struggling with severe budget deficits. In Rhode Island, the tiny town of Central Falls is on edge of bankruptcy.
Catherine Welch of member station WRNI says officials have few options in a place where many residents live below the poverty line.
CATHERINE WELCH: Central Falls is only one square mile. That means there isn't a large tax base to cover the large demand for city services.
Mr. ROBERT FLANDERS (Attorney): I feel terribly for them, it's awful that we're in this pickle.
WELCH: That's Robert Flanders Jr., the Rhode Island appointed receiver running the city. Flanders is trying to convince a neighboring city to take over Central Falls, but he's running out of time.
Mr. FLANDERS: So unless we get some relief on the cash flow problem, we're going to be in a crises situation, even beyond what we're in now sooner rather than later.
WELCH: The pickle comes from the city's failure to do adequate fiscal planning. Retired police and firefighters may not get their pension checks starting in October. To boost revenues, Central Falls raised property and car taxes by 19 percent. But residents are barely scraping by, and so far, many of them aren't coming up with the cash to pay their increased taxes.
For NPR, I'm Catherine Welch. Transcript provided by NPR, Copyright NPR.