Central Falls’ state-appointed receiver is proposing a 40% reduction in the city’s police and fire budget as part of its Chapter 9 filing, according to court documents filed Monday.

Receiver Robert Flanders asked U.S. Bankruptcy Judge Frank Bailey to void the city’s contracts with its police, fire and municipal unions. To support the proposal, he presented two city budgets for 2011-12 – its current unbalanced one, and a proposed balanced one that could be put in place if the contracts are thrown out.

The balanced budget would reduce Central Falls’ municipal spending this fiscal year by 26%, from $22 million to $16.3 million, to match its revenue. The bulk of those savings would come by reducing the police and fire departments’ budgets from a combined $10.6 million to $6.4 million.

“Many of the changes producing significant savings … are changes in the active labor force either by reduction, consolidation or shared services which would be prohibited under the terms of the CBAs,” or collective bargaining agreements, Theodore Orson, the city’s bankruptcy attorney, wrote in the filing.

Orson went on to say the city will treat the union contracts as null and void effective immediately, and warned of dire consequences if the judge reinstates them rather than siding with Flanders.

“Unless the CBAs are rejected, the city will be ‘upside-down’ financially and will be unable to pay its debts as they become due,” he wrote. “Without rejection, the city will default on its pension obligations and other obligations. It might even default on its bond obligations which would have enormous policy implications beyond Central Falls.”

The unions’ attorneys filed notice with the court on Monday. Carly Beauvais Iafrate of Providence will represent the Fraternal Order of Police, Lodge 2, and Elizabeth Wiens of Gursky Law Associates in North Kingstown will represent the Central Falls Fire Fighters Union, IAFF Local 1485.

A hearing on the city’s bankruptcy case is scheduled for Wednesday morning at U.S. Bankruptcy Court in Providence.

More Central Falls coverage on Nesi’s Notes:

• Central Falls’ top unsecured creditors are Cardi, landfill (Aug. 2)
• Mix of confusion and resignation in bankrupt Central Falls (Aug. 1)
• Beardsley: Central Falls bankruptcy ‘a wake-up call’ to unions (Aug. 1)
• Why Central Falls owes its retirees $80 million in benefits (July 19)
• What Chapter 9 bankruptcy would mean for Central Falls (May 11)