Massachusetts Takes Over Insolvent City

CHELSEA, Mass. —  Gov. William F. Weld on Thursday signed legislation placing Chelsea under state control, and a receiver named to run the desperately poor city said his first priority is opening schools.

Mayor John J. Brennan Jr., who backed receivership for his city, cleared out of City Hall as former state Transportation Secretary James Carlin took over management of Chelsea, which is in a financial hole so deep it could not open schools or pay employees.

The city of 28,000 next to Boston is the first Massachusetts community to be declared insolvent since the Great Depression. It laid off a third of its 300 teachers and has kept its 3,700 schoolchildren home this week after running out of money.

Chelsea, with a budget deficit of more than $9 million, covers just 1.9 square miles. The lack of land to develop and the city’s large number of poor residents have made it virtually impossible to increase the tax base, officials said.

Carlin has authority to change zoning regulations, reopen union negotiations and impose or raise fees, but not property taxes.