The Town of West Warwick doesn’t have the money to pay the $10-million settlement offer it has made to the victims of The Station nightclub fire and wants the state to pick up $6.5 million of the tab — the amount not covered by its insurance.

Town Solicitor Timothy A. Williamson, a Democratic state representative from West Warwick, told The Providence Journal in an interview that “we’re looking to see whether the state could possibly take $6.5 million off our backs.”

He said he would introduce a bill calling for the appropriation or push for the money to be included in the state budget for the next fiscal year, depending on which approach other legislators prefer.

If legislators don’t look favorably on either of those approaches, he said, a bill will be introduced to allow the town to issue a 30-year bond instead of one for 20 years.

But borrowing money may be too expensive in the long run for the town, Town Manager James Thomas said yesterday. “Rome is burning right now, and we need help.”

Williamson said that, in his opinion, “The state taxpayer is in a better position to pay for this than the West Warwick taxpayer is.”

But Williamson and the rest of the town’s delegation may have a very difficult time convincing the full General Assembly to foot a legal obligation that West Warwick has agreed to take on. The state is facing a $357-million deficit and Governor Carcieri has already said he wants to defer paying the $10 million that the state has offered to the fire victims to settle their cases until the fiscal year that begins in July. Although the court has not approved the settlements yet, the victims’ lawyers had hoped to be able to distribute the money by late spring.

The state and the Town of West Warwick were among dozens of parties sued by more than 300 people who lost loved ones or suffered injuries in the fire at The Station the night of Feb. 20, 2003. All together, $176 million has been offered by all of the defendants to settle the victims’ claims, which are currently pending in U.S. District Court.

Last August, the Town of West Warwick and the State of Rhode Island each agreed to contribute $10 million to the settlement pool. Lawyers for the victims allege in their lawsuits that the state, the town and some of their employees were responsible for the deaths and injuries suffered by their clients because of “egregious” negligence. They claim state and town employees failed to police overcrowding and properly inspect the nightclub, whose walls were covered with highly flammable polyurethane foam.

The state has no insurance to cover any part of the $10 million it has offered. The town is insured by the Rhode Island Interlocal Risk Management Trust, but only up to $4 million. Williamson estimates that West Warwick will have to come up with $6.5 million to close the gap because it is responsible for paying attorney’s fees for the trust’s lawyer, Marc DeSisto, which he estimated could run up to $500,000.

Williamson said the town is in such dire straits that the usual methods of financing such a legal obligation aren’t feasible. The town has less than $3 million in its rainy-day fund. Over the next 36 months, he points out, it will have to spend about $4 million for fire code upgrades to the field house, ice rink, high school and middle school.

Last July, the town hiked property taxes 5 percent “and now,” Thomas noted, “the School Committee is asking the Town Council for a 6-percent supplemental tax increase, to take effect immediately, to make up for a $4 million deficit in the school budget.”

Because the state has told West Warwick that it will get $1.25 million less in state aid, “money that we thought was coming to us in May ’09,” said Thomas, adding “there’s a strong possibility the Town Council will approve another 4.75 percent tax increase” to take effect in July.

That’s almost 16 percent in property tax increases in just one year, Thomas said.

Selling a 20-year bond to cover the $6.5 million is another option but Williamson said that because West Warwick’s bond rating is so low –– “just above junk bond rating and if we issue the bond it would go to junk bond” –– the town would have to pay high interest, which he estimated would bring the total tab to $10 million to $12 million. Stretching the bond to 30 years would give the town more time to make payments, but Thomas said the interest rate at 30 years would be 6.75 percent to 7 percent. That would mean that the town would be faced with paying about $16.5 million to pay a $6.5 million legal obligation. Johnson said.

“In the posture we’re in right now,” said Williamson, “there’s no way we can do it. The number of foreclosures and bankruptcies in the town are high and there aren’t a lot of new businesses coming in.”

tbreton@projo.com