Municipal Leaders: Pension Bill Ignores Cities and Towns
Friday, November 11, 2011
While the revised pension reform plan passed out of both the House and Senate Finance Committees Thursday evening may provide some relief for pension recipients who were originally looking at losing their cost-of-living adjustments (COLAs) for up to 19 years, municipal leaders say they weren’t as fortunate and now cities and towns will likely have to address local pensions without the help of the state.
Changes to the original proposal submitted by Governor Lincoln Chafee and General Treasurer Gina Raimondo include the opportunity for pension recipients to receive up to a four percent COLA on the first $25,000 of income every five years as long as the state meets investment goals as well as a change in the retirement age depending on how close a public employee is to retirement.
Much of the rest of the legislation went unchanged and despite intense lobbying efforts from local leaders, state did not grant cities and towns the ability to freeze COLAs that in some cases go as high as six percent every year. Instead struggling non-MERS municipal pension plans will now be analyzed by a study commission.
Dan Beardsley, executive director of the Rhode Island League of Cities and Towns, said that while the bill is still being interpreted in different ways by different people, he is among those upset by the General Assembly’s decision not to address local pensions.
“With the non-MERS communities, I share the Governor’s deep disappointment that their pleas for assistance weren’t acknowledged,” Beardsley said.
For others, disappointed is an understatement. West Warwick Town Council President Angelo Padula said his town sent letters and passed resolutions asking for pension plans to be addressed to no avail. He accused everything on Smith Hill of being addressed in “backdoor” meetings.
“It’s ludicrous,” Padula said. “You can’t keep paying pensions and let it keep going and make taxpayers pay for it. They have to give cities and towns some power.”
But they didn’t, according to Padula, who said his town is on the verge of going broke and that no one wants to help. He said that the pension system in West Warwick is only five years from being insolvent and if that happens, the town could be forced into bankruptcy.
“If they give us no pension reform, nobody is going to get anything,” Padula said. “You couldn’t raise taxes enough pay for these pensions.”
Under the revised legislation, cities and towns will have 180 days to submit solvency plans for their struggling pension systems. Cranston Mayor Allan Fung, who has been among the loudest critics of the pension reform bill’s failure to address local plans, said he is disappointed the General Assembly did not consider an amendment that would have helped his city.
“They didn’t do much to help us at all,” Fung said. “I’m extremely disappointed they didn’t follow our suggestions, particularly with respect to the COLAs. With the changes they did make I would have rather seen them do nothing at all.”
Providence Mayor Angel Taveras said the future will show that Rhode Island did not achieve comprehensive pension reform because the state refused to address cities and towns.
“Until we tackle our state’s municipal pension crisis, taxpayers will continue to stagger under the weight of unaffordable pension obligations that should not have been committed to in the past, and our leaders at the State House will continue to contend alongside mayors and town managers with the challenges of failing pension systems throughout Rhode Island,” Taveras said.
Taveras said the city has identified the tools it needs at local level to accomplish comprehensive pension reform and now it will have to find a different way to address the problems.
Chafee: Our Job is Not Done
Local leaders weren’t the only ones upset that cities and towns will not be helped by the proposed pension reform bill. Governor Lincoln Chafee said Wednesday he plans to introduce a bill to address the state’s failing municipal pension plans on the first day of the next legislative session. He said he is “deeply disappointed” independent local plans are not being altered.
“The collapse of these plans would threaten the fiscal stability of the cities and towns that operate them – including three of the state’s four largest cities – and taxpayers cannot afford and will not accept incomplete pension reform,” Chafee said. “We cannot pretend to have comprehensive reform if we ignore the most urgent part of the crisis, further burden our municipal property taxpayers, and risk other painful Central Falls situations.”
The sweeping overhaul of the state system may be a step in the right direction, but Chafee said the work is not complete.
“Our job is not done,” he said. “Only after we address Rhode Island’s troubled independent municipal pension plans will we have achieved truly comprehensive pension reform for our great state.”
One Mayor Supports Bill
Despite the calls by some of his colleagues to expand the existing proposal to include non-MERS municipal systems, Warwick Mayor Scott Avedisian said he supports the legislation in its current form. Avedisian has long said that because each city and town has a unique plan, the General Assembly couldn’t possibly address local pensions in a single bill.
“The reforms being considered came after nearly a year’s worth of careful, thorough and comprehensive analysis of the myriad issues surrounding the state’s pension systems,” Avedisian said. “It is critically important that the same care be taken, from a legal standpoint and considering each community’s individual needs, with non-MERS systems.”
Avedisian said including local plans in comprehensive statewide pension reform now could result in significant, additional legal challenges that would prevent any reform from taking place. He said that is not a risk the state can afford to take.
“The General Treasurer has made it clear, and has reiterated many times throughout this process, that after the statewide system reforms are finalized, she and her staff are ready and willing to work with individual communities to assess those individual needs, thoroughly examine each system, and will work with us as we develop comprehensive and effective proposals that will not only benefit communities financially but that will withstand legal challenges,” Avedisian said.
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