Rob Horowitz: RI Leads the Way on Pension Reform
Tuesday, November 22, 2011
With the adoption of a landmark pension reform law, passed by overwhelming margins in the General Assembly and signed into law on Saturday by Gov. Lincoln Chafee (I), Rhode Island is providing the rest of the nation with a blueprint for solving the difficult problem of unaffordable government pensions plaguing most states.
As Fitch Ratings, one of the three major credit agencies said, “Approval of broad pension reform by the Rhode Island legislature increases financial stability for the state and may set a precedent for other states.”
This is the kind of favorable national attention that causes entrepreneurs and businesses looking to relocate to take notice. It sure beats that kind of negative attention we are all to used to receiving—national stories about the latest indictment of a Rhode Island politician or Central Falls going bankrupt just to mention a couple of recent prominent examples.
This sweeping law lives up to its glowing reviews. It cuts the $7.3 billion unfunded state pension liability nearly in half and dramatically reduces anticipated annual state budget outlays for pension costs. The new law suspends cost-of-living adjustments for retirees for at least five years; converts existing and future employee pensions to a hybrid with a 401(K) component; raises the retirement age and refinances some of the debt to extend the payment over time. It ensures that the state pension system will be sustainable for the long-term.
This law was passed over the strong objections of the influential public employee unions thanks to the constructive, persuasive and persistent leadership of Gen. Treasurer Gina Raimondo (D), along with the solid assistance of Governor Chafee. Raimondo, in particular, is to be commended for refusing to do the usual political finger-pointing and blaming and staying focused on matter-of-factly defining the scale of the problem and on offering a comprehensive and pragmatic solution.
The Democratic leaders of the General Assembly, Speaker Gordon Fox and Senate President Teresa Paiva Weed also deserve much credit for putting the interests of all Rhode Islanders ahead of the interests of an influential and powerful base constituency.
This big step forward for Rhode Island can serve as a momentum builder for legislators to complete the work of pension reform by adopting legislation next session giving municipal leaders the ability to fix their pension systems, many of which are in worse shape than the state system.
It also provides a model of constructive political leadership that reaches beyond party lines and traditional alliances to tackle the other big challenges that face our state. While it is important to note and appreciate the sacrifices now required of existing retirees and current state employees, adoption of this landmark reform can mark a new beginning for good governance and a much improved Rhode Island.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTRob 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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