Central Falls, R.I. - the smallest city in the smallest state - is facing a big problem that some fear could spread with increased frequency to other municipalities across the land: fiscal collapse caused in large part by unfunded pensions.

Earlier this week the impoverished city of 18,000 filed for bankruptcy after retired municipal workers refused to allow their pensions to be cut in half. Central Falls, which measures only 1.5 square miles (New London's area is 10.76 square miles, of which nearly half is water), has $80 million in unfunded pension and retiree health benefit liabilities, more than quadruple its annual budget of $17 million.

Like many cities in the Northeast, Central Falls has been in dire fiscal straits for years - despite an incongruous motto on its website, "City with a Bright Future." In July 2010 Rhode Island placed it under state control.

It's too soon to say what will happen in Central Falls. While some experts warn Central Falls' travails are symptomatic of a broader nationwide collapse, others point out that there have been only 624 municipal bankruptcies in the United States since 1937, including five in the last year.

Once a bustling manufacturing hub that produced brooms, aprons, art goods, badges, soda bottles, candy, stationery, tools and textiles, Central Falls had been one of about 30 villages that were part of the town of Smithfield. Dozens split off into separate municipalities.

Now that most of the old mills have closed, these separate cities can no longer afford to provide separate services.

We view the situation in Central Falls as further evidence that local governments should be working more toward regionalization rather than trying to retain provincial independence.

This is a lesson that should be learned not just in Rhode Island, but in Connecticut and across the country.

Otherwise, more cities could wind up like the old ghost towns out West.