Showdown Looms Over Municipal Pension Crisis
Saturday, January 14, 2012
Rhode Island Governor Lincoln Chafee’s two-hour meeting with union leaders Thursday resulted in threats of legal action tempered with a pragmatic willingness to negotiate alterations to municipal pension plans.
Governor Chafee’s second high-profile closed-door meeting in as many weeks—the other was last Thursday with nearly every Ocean State mayor—was another chance to exchange ideas on how to address systemic municipal pension woes ahead of his budget proposal, expected in the next few weeks.
Taveras is Weary
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTWhile both meetings were seemingly productive for the Chafee administration, Providence Mayor Angel Taveras thinks negotiation might have passed its sell-by date.
“In Providence, we believe in collective bargaining, and negotiation is always preferable to confrontation,” Mayor Taveras said. “But we need to address the 5% and 6% compounded COLAs [Cost Of Living Adjustments] that were given out many years ago in order to fix Providence’s pension system and secure the economic future of our city, and our unions don’t represent retirees at the bargaining table.”
“Make no mistake about it,” he added, “we cannot contract our way out of this problem.”
Woonsocket Supports Closed Door Meetings
“I think there’s a growing awareness of the problem that we, as cities and towns, face with the state,” Woonsocket Mayor Leo Fontaine said. “But I think labor’s offers of negotiation sometimes just don’t effect the change that we need quickly enough to be able to solve the crisis that we have.”
While Mayor Fontaine seemed supportive of the closed-door meetings, he said they might as well have taken place out in the open.
He continued, “Obviously, I think that everyone needs to look out for their own best interests. I don’t begrudge anybody that opportunity.”
“But,” he continued, “I think we all need to at least accept the reality that we have a crisis on our hands and I don’t know if everybody’s really come to that realization yet.”
The crisis to which Mayor Fontaine refers, of course, is Rhode Island’s $2 billion unfunded municipal pension liability.
Ideas reportedly being considered by Governor Chafee, like the temporary suspension of COLAs are, according to Mayor Fontaine, “basic strategies that will be helpful across the board that may not solve everybody’s problem but will be of benefit to everybody.”
{IMAGE_3}Cranston's Hope
Cranston Mayor Allan Fung who, like Mayor Fontaine, serves a city with a closed pension system that admits no new employees, voiced very similar concerns.
“I particularly impressed upon Governor Chafee the challenges that I face in Cranston with our closed pension system at the local level,” he said. “Hopefully he takes that into consideration.”
Negotiation, Mayor Fung added, couldn’t even solve Cranston’s problem because, as Mayor Taveras mentioned, the unions do not negotiate for retirees.
“To save Cranston’s pension system,” he said, “it’s not necessarily negotiating with the unions because I can’t negotiate with them to save the system.”
He continued, “The bulk of my closed system are retirees. Even if I were to make changes to the more active guys who the union can negotiate for, that won’t save the system because of how poorly funded the whole entire plan is.”
A statement issued by Pawtucket Mayor Donald Grebien’s office reads: “Until any legislation is actually filed, it is impossible to assess what its effects might be for the City of Pawtucket.”
“The city,” the statement concludes, “also remains committed to seeking necessary changes through the collective bargaining process. Pawtucket’s current fire and police contracts expire June 30, 2012.”
Mayor Fung echoed Mayor Fontaine’s call for a freeze on COLAs and added, “Mayor Taveras, myself and other mayors and town administrators are asking for specific amendments like capping collective bargaining agreements to no greater than what’s in the reformed state system.”
The 36 separate locally administered pension systems in question each present a set of challenges distinct from one another creating an uphill battle for unions, mayors, town administrators and legislators.
The very recent state system reform to which Mayor Fung referred seems like a distant memory and the municipal pension system doesn’t seem to be any closer to the stability municipalities require to avoid receivership and bankruptcy.
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