Donna Perry: Union Strategy: Sabotage Pension Reform

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Thursday, September 15, 2011

Donna Perry, GoLocalProv MINDSETTER™

As if the high stakes battle over pension reform in Rhode Island wasn’t playing out dramatically enough, a judge took it up a few notches this week with a ruling from Superior Court.

Superior Court Judge Sarah Taft-Carter, in ruling on a union lawsuit against a series of generally modest pension changes made by the state between years 2009-2010, denied the state’s request to have the lawsuit tossed out of court.

The Judge emphasized the ruling did not represent a victory on the merits of the wider case, but was only a motion to allow the lawsuit to proceed, saying the pension changes in question did constitute a substantial impairing of the “contractual relationship” between the pension system itself and the participating employee.

But that’s all the unions needed to load up on ammunition, start misrepresenting the narrow court ruling,and set their targets on the bigger battle in the war: the coming pension reform legislative session in October.

Sabotaging The Pension Reform

The unions stopped all pretense this week that they ever had any true intention of participating in a solution or compromised changes to the ticking time bomb pension system. They rolled out a video and talking points that verify their only strategy is to actually sabotage the pension reform process this fall, plain and simple.

By telling their teachers, state workers and other members that “statehouse politicians are trying to take your pensions away” and the mantra now is to “fight back”—it became crystal clear that the four union leaders who spent months on the statewide Pension Advisory Panel did so apparently only as a charade, and now, as the Panel formally wrapped up this week, the show is over. Time to hand out the tee shirts and the talking points, schedule the rallies and storm the statehouse.

The unions can’t be faulted for fighting by the only playbook they’ve ever used. But at this juncture, elected officials, especially the Governor, Treasurer Raimondo, and Speaker Fox have got to tell them the time has come to put down the playbook once and for all. The reason has something to do with the Judge’s reference to the litmus test that courts use to rule on legitimate changes to pensions. It has to do with something that’s termed legitimate or compelling public purpose. Is there a sufficient legitimate public purpose to modifying an expected pension benefit or especially a COLA to vested or retired workers? The Judge also emphasized that rulings on this very central question fall into a grey area.

Treasurer Raimondo, in briefing the State Senate this week, warned the system is presently bleeding $300 million a year and not sufficiently replenished. If no change of course is now set, that would result in the fund becoming depleted in a handful of years. Does that sound like legitimate purpose?

If the cities of Providence, Cranston, Pawtucket, and Woonsocket and the towns of West Warwick, Johnston, North Providence and others could be facing fast moving scenarios where their local budgets will need to dedicate 40 –up to 50%--or more-- of all revenue toward retirement benefits --- leaving broken down local roads, closed senior centers, shuttered libraries, dilapidated schools, and aging, unmaintained recreational fields in their wake to keep paying the mounting tab—does that amount to legitimate public purpose ?

RISC’s Pension Plan

If the state itself, facing pension costs that will climb toward a billion dollars a year, (over $600 million this year)has to divert resources that fund homeless shelters, impoverished families, child protection services, and the whole array of programs in the human services safety net to satisfy the retirement tab, will that convince the court there is legitimate public purpose to make a change here?

What has been most encouraging this past week was the voices of reform sounding loud and clear. Leading for the taxpayer, was the Rhode Island Statewide Coalition (RISC), as it rolled out a five-point pension proposal. It calls for conversion to a 401-k system and COLA elimination, the termination and merger of the 150 scattered smaller plans, among other components, and adds important items for consideration as the fall legislative session, court ruling or no, goes forward.

Indeed, union spin on the court ruling aside, reformers should be encouraged by the collective responses to the fast moving events this week.The Governor vowed to press forward in the court matter and garner a new ruling on the central question from Supreme Court and most importantly, Treasurer Raimondovowed to present the reform recommendation in coming weeks. Legislative leadership, especially Speaker Fox, didn’t appear to blink at the court rattling and said the session is on track.

Equally impressive was the newfound leadership voice coming from Administration Director Richard Licht, who stated decisively that a major tax increase is not going to happen to pay for this mounting pension tab and that, absent a definitive pension change this fall, he would propose worker layoffs in this winter’s budget.

The only voice missing from the unfolding narrative this week was that of a late legendary actress. It’s time to channel Bette Davis. Fasten your seat belts, folks. This fall is going to be a rocky ride.

Donna Perry is a Communications Consultant to RI Statewide Coalition (www.statewidecoalition.com)

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