NEW: Chafee Blasts Pension Bill for Not Addressing Municipal Problems
Thursday, November 10, 2011
Regarding Joint House and Senate Finance Committee Pension Legislation
Over the past ten months, I have worked closely with the General Treasurer to craft a truly comprehensive pension reform plan that ensures retirement security and is fair to each of the three main interested parties: retirees, current employees, and the Rhode Island taxpayer. I thank the General Treasurer and the General Assembly for their hard work and for having the commitment to take up this complicated and difficult issue during a special legislative session.
I am therefore encouraged that the joint Finance Committees have put forth amended legislation that would address the state’s $7 billion unfunded pension liability. In my view, the single most effective way that we can market Rhode Island and improve our economy is to get our fiscal house in order. Adoption of this modified bill would be a substantial – but incomplete – step toward comprehensive pension reform.
As I have said, however, truly comprehensive pension reform must include municipal pension reform. 24 of Rhode Island’s 36 independent municipal pension plans are failing. 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. 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.
Furthermore, it is unfair and defies logic to continue to pay unaffordable COLAs to municipal retirees – many of whose systems are in far worse condition than the state – while asking retired state employees, teachers, and some municipal employees to forfeit their own COLAs.
I am deeply disappointed that the amended bill presented to the committee today fails to address the problem of our insolvent municipal pension systems. In order to correct this shortcoming, on the first day of the legislative session in January I will introduce a bill to address Rhode Island’s failing municipal pension plans. I look forward to working with our municipal leaders and the General Assembly to craft a legislative solution that ensures that our independent city and town pension systems will return to solid financial health.
Our job is not done. Only after we address Rhode Island’s troubled independent municipal pension plans will we have achieved truly comprehensive pension reform for our great state.