Rob Horowitz: Give Municipalities the Ability to Act on Retiree COLAs
Tuesday, November 08, 2011
Rhode Island Mayors are pushing to add a provision in the pending pension legislation to allow cities and towns to address retiree Cost-Of-of-Living-Adjustments (COLAs). This narrowly drawn, common-sense measure should be included in the final legislation and passed into law if we are to completely address the enormous problem facing this state as a whole.
States are only as strong as their cities and towns and right now, Rhode Island cities and towns face an enormous $2 billion unfunded pension liability with many of the municipal plans in even worse fiscal shape than the state pension system.
While the freeze in COLAs for retired teachers--- already included in the legislation-- will be helpful to cities and towns, this change alone will not solve the problem. Additional steps are needed to make most of these locally run plans fiscally sound and to do so without steep increases in local property taxes or draconian service reductions.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAs is the case with the state pension system, curbing COLAs for retirees is a critical part of the solution. It is simply too big a part of rising pension costs to omit. Giving cities and towns the option to freeze or reduce retiree COLAS will go a long way towards providing the tools our municipalities need to solve their pension shortfalls at an affordable price. It will also ensure that sufficient funds will be available to continue to provide pensions to municipal retirees for the long term.
There are no practical alternatives for cities and towns to pragmatically tackle the problem of compounding and unaffordable retiree COLAs. Mayor Taveras (D- Providence) and Mayor Fung (R-Cranston) persuasively point out that retiree pensions cannot be addressed in the collective bargaining process since unions can only negotiate for current employees and not retirees. (Disclosure: I served as an advisor on the Taveras’ mayoral campaign)
Postponing addressing the municipal pension issue for another day presents too great a risk of inaction. Given the huge political lift required to adopt comprehensive pension reform, the political will for more action on pensions after this legislation becomes law simply may not exist for the foreseeable future.
Credible legal experts believe that enabling cities and towns to act on retiree pensions given the compelling public interest in doing so will withstand a Court challenge. But in the unlikely event this provision is struck down, the legislation contains a severability clause, which means that the rest of comprehensive pension reform will stand as long as it passes legal muster.
Gen. Treasurer Gina Raimondo (D), Gov. Lincoln Chafee (I) and the legislative leadership should embrace this proposal to allow our cities and towns to control their own fiscal destiny and fix their municipal pension problems by acting on retiree COLAs. Including this provision in comprehensive pension reform will make already strong legislation even stronger and our state stronger as a whole.
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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