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City Pays Over $130k Annually for Elected Officials’ Special Pensions

Tuesday, February 28, 2012

 

With Mayor Angel Taveras poised to ask Providence retirees later this week for a slew of concessions to help the city avoid filing for bankruptcy, a GoLocalProv review of city pension figures shows at least 31 former Council members and Mayors are receiving a special second pension reserved only for elected officials.

The annual cost for the city’s special elected officials’ pensions amounts to $138,428.40, according to a review of 2011 pension records provided by the city. And while it may only be a tiny fraction of the more than $1.3 billion in pensions promises the city has made, several elected officials say politicians should lead by example when it comes to making concessions.

No one makes more $850 per month (former Councilman Thomas Pearlman) from their special pension, but many former elected officials receive additional pensions from their time as city employees.

The total yearly tab when all pensions are combined? $563,018.28.

“The current state of the city’s pension system is a ticking time bomb,” said Councilman David Salvatore, who has declined his second pension. “A lot of people for too long have tried to ignore this problem. As part of the review of the city’s retirement ordinance, the council subcommittee on pension sustainability is committed to being vigilant and making financial decisions that are in the best interest of Providence taxpayers. I remain committed to addressing our pension challenges and preserving retirement benefits for all of our retirees and active employees.”

Taveras: Time for Sacrifice

Taveras has also declined his second pension, saying last year that “one pension is enough. It is a small step but an important symbol of the effort we need to take to create a sustainable financial future in the City of Providence.”

During his State of the City address two weeks ago, Taveras noted the each of the city’s top 25 pension recipients are collecting more than $109,000 per year and indicated that he plans to freeze cost-of-living-adjustments and cut benefits to retirees in an effort to curb costs. The city currently faces a $22.5 million deficit and Taveras has warned that a supplemental tax increase and bankruptcy are options the city isn’t ruling out.

He has singled out former Fire Chief Gilbert McLaughlin, who retired in 1991 at a salary of $63,510.72 and now makes $196,813.08. Taveras said McLaughlin collects more than five times the income of an average Providence resident and he collects more money from the city as a retiree than any working Providence employee.

He said it’s time for retirees to share in the sacrifice.

“While our city workers, teachers, police officers and firefighters are foregoing raises, many of our retirees continue to collect 5 and 6 percent compounded raises every year,” Taveras said. “Taxpayers and business owners know that guaranteed yearly raises of this magnitude – or any magnitude in these economic times – make no sense. This must stop now.”

Taveras is holding a town hall-style meeting with all city retirees on Saturday to brief them on the city’s fiscal condition. He will likely explain that if retirees do not agree to negotiate changes to their current retirement plans, bankruptcy could be the next option. In that event, a state-appointed receiver would essentially be able slash pensions or benefits without any approval from retirees.

"We stare into that black hole because some have failed to sacrifice," Taveras said. "Our tax-exempt institutions and city retirees have yet to join the rest of our community in helping to save our city."

During the last legislative session, the General Assembly granted Providence the right to move retirees over the age of 65 to Medicare, but a Judge issued a preliminary injunction that stopped the city from shifting their coverage after police and fire retirees challenged the decision. The State Supreme Court has said that it will not expedite the city's appeal or lift the injunction.

"The unsustainable promise of free health care for life continues the burden on the taxpayer increases and the window of opportunity to pull our city out of the black hole grows increasingly smaller," Taveras said during his State of the City address.

Removing Elected Officials' Pensions a Small Step

While the special pension awarded to elected officials is not large, a number of recently-elected Council members have declined their pensions. In addition to Mayor Taveras and Salvatore, Council President Michael Solomon, Councilman Sam Zurier and Councilwoman Sabina Matos have declined their second pensions.

Last year, Matos said a special pension is not something she “expected or need.”

“After the orientation for newly elected Council members, I was surprised to learn about this additional pension,” Matos said. “I am here because of my strong commitment to public service. A special pension is not something I either expected or need. In these challenging times, I strongly believe that I should be ready to make the same kind of sacrifices we will be asking for from other City employees.”

Under the elected officials’ pension plan, $350 is deducted from councilors’ salaries each year, and they are eligible to receive an annual pension at the time of retirement of $350, times the number of years served on the Council (minimum eight years; maximum 20).

But Salvatore is leading an effort to end the special pensions altogether. He said taxpayer funds should not go toward paying benefits for elected officials.

“Removing elected officials pensions is a small step in solving our City's pension woes,” Salvatore said. “It is imperative that we end pensions for all public officials – a move that the state legislature addressed while passing pension reform last fall. Money belonging to taxpayers should not be used to fund public official pensions, rather invested in our communities.”

For Salvatore, eliminating the special pension would be a step in the right direction for the city.

“This action is just one of the changes that we will address in the City’s largest systematic effort to address the sins of the past,” he said.

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