Central Falls Paves the Way for Pension Reform
Tuesday, July 26, 2011
With many retirees solely dependent on their municipal pension for income, it could not have been easy for Flanders to urge retirees to take a 50 percent cut or risk losing much more if the city declares bankruptcy. In doing so, however, Flanders set the table for the work of Gen. Treasurer Gina Raimando and Gov. Lincoln Chafee in forging a solution to Rhode Island’s nearly $10 billion in unfunded pension liability. It also further highlights the need for the special legislative session on pension reform this Fall.
Central Falls has the dubious distinction of being the proverbial canary in the coal mine. It is arguably in the worst financial state of all the cities and towns with a $5 million deficit on a budget of only $17 million; an unfunded pension liability of more than $80 million; and few community resources upon which to draw. But, the tough medicine Flanders is faced with delivering and the real human suffering that is likely to occur for pensioners should remind us that acting now to solve our pension problem is far better than the potentially disastrous consequences that can be caused by further delay.
Central Falls' ongoing fiscal problems will continue to play out over the summer and this should fuel political momentum for a comprehensive solution to the pension problem. The mayors of Rhode Island’s three largest communities also recently sounded the alarm, driving home the point that solving the pension problem is not only critical to the fiscal health of state government, but also to the fiscal health of our cities and towns. In Providence, for example, for every five dollars in the budget, one dollar is allocated for retirees. This number will continue to rise without significant changes to our pension system with all three Mayors agreeing that the problem can only be solved if it includes at least some adjustment to what current retirees are receiving.
The Central falls retirees have turned all the abstract numbers of the pension debate into all too human reality. The stakes are high. Now, it is up to our leaders to get the job done.
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Rob Horowitz is a strategic and communications consultant who provides general consulting, public relations, direct mail services and polling for national and state issue organizations, various non-profits and elected officials and candidates. He is an Adjunct Professor of Political Science at the University of Rhode Island.
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