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Will the State & Organized Labor Reach a Deal on Pension Reform?

Wednesday, December 19, 2012

 

The decision by Superior Court Judge Sarah Taft-Carter to order the state and public employee unions into mediation to negotiate a settlement over the state’s pension overhaul was met with mixed reaction Tuesday, with Governor Lincoln Chafee and labor leaders praising the decision and taxpayer advocates questioning whether a deal is even practical.

Taft-Carter’s announcement came several weeks after Chafee, union chiefs and several municipal leaders such as Providence Mayor Angel Taveras and Cranston Mayor Allan Fung suggested that returning to the table for negotiations may be the state’s best chance at achieving pension reform. General Treasurer Gina Raimondo –the key architect behind the deal— and House Speaker Gordon Fox disagreed, arguing that the time for negotiations was in 2011 when the General Assembly passed pension reform legislation.

“While the state has a strong case, a strong case does not guarantee a win,” Chafee said Tuesday. “A negotiated settlement that is satisfactory to both sides could be in the best financial interest of the Rhode Island taxpayers. Such an outcome would be a favorable alternative to costly, uncertain litigation and – worst of all – the ‘fiscal calamity’ of a potential loss in court.”

Last year, Chafee signed legislation into law that moves public employees in a 401k-style hybrid plan, freezes cost-of-living-adjustments (COLAs) and raises the retirement age for many union workers. In doing so, state’s unfunded pension liability was reduced by $3 billion the state was expected to save nearly $300 million by 2013.

But the unions are challenging the legality of the sweeping reform package and have long been calling for negotiations. Rhode Island Council 94 president J. Michael Downey said he was pleased with Taft-Carter’s decision to order all side back to the bargaining table.

“We’re excited about the idea of mediation,” Downey said. “Hopefully it will give us the chance to be heard. I know many of the state’s leaders said that they had all kinds of meetings where labor got a chance to be heard, but we were never listened to. It’s our desire that the mediations will produce a resolution to this pension lawsuit and Council 94 is willing and ready to meet in good faith and we hope we can resolve our differences in mediation.”

Raimondo: State will Negotiate in Good Faith

By entering mediation, the state and the unions will attempt to reach a settlement in similar fashion to the way the city of Providence reached an agreement with its municipal unions and retirees earlier this year. The two sides are expected to update Taft-Carter on their progress in February and if a deal cannot be reached, a trial could begin next spring.

There are some differences to the situation in Providence, however. In the city’s case, the request to enter mediation came from both city officals and the unions; on the state side, Treasurer Raimondo has maintained that she believes the legislation will hold up in court. Still, Raimondo said she is willing to give negotiations a chance.

"I have great respect for the judicial system and it is important to let this process unfold in an orderly and transparent way,” she said. “We owe that to the people of Rhode Island and to our public employees. We continue to believe the state has a very strong case and a terrific legal team. As I have consistently said, we will participate in court-ordered mediation in good faith."

Critics: Mediation Means Concessions

But critics say any deal that doesn’t include the key portions of the legislation would be detrimental to the state. Rhode Island Statewide Coalition executive director Donna Perry said it appears Chafee has spent too much time listening to the unions and suggested the settlement talks will prove whether or not he’s willing to stand with the taxpayers.

“It’s worrisome that the first major ruling by Judge Taft-Carter on this landmark case is to order mediation talks,” Perry said. “Taxpayers have to be concerned about the direction this judge may take with this case and can only hope that with the court looking on, the unions may become more conciliatory on the larger reform points than they historically have been.”

Ocean State Tea Party in Action spokesperson Lisa Blais agreed with Perry. She praised the pension reform legislation for helping to create a solvent system for its pensioners and saving the state from financial ruin.

“The question must be answered here in Rhode Island: Will the public unions control Rhode Island’s economic destiny or will sanity prevail for the best interest of every taxpayer? Bottom line, mediation means concessions, which translates into regressive, unsustainable costs to taxpayers,” Blais said.

State Senator: Any Deal Must go Back to Legislature

Still, even if a deal can be reached, any changes to the legislation would have to go back to the legislature, which is why State Senator Dawson Hodgson said he was surprised that Taft-Carter called for mediation in the case.

“While the judiciary has authority to invalidate all or part of a statute (which is what the plaintiffs are requesting in their lawsuits) no one has the power to rewrite the law the way they see fit,” Hodgson wrote in an e-mail to GoLocalProv.

Hodgson said that unless provisions of the legislation are nullified by the court, it will have to go back to the legislature for any changes.

“To me, it seems that mediation only makes sense when the parties at the table actually have the power to resolve the dispute,” he said.

 

Dan McGowan can be reached at dmcgowan@golocalprov.com. Follow him on Twitter: @danmcgowan.

 

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