State Senate Shields Union Benefits

Thursday, May 12, 2011


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The leadership of the state Senate announced in recent days that it will host an Economic Summit on May 16 entitled “Growing RI,” with an emphasis on strategies for job growth in the tourism, technology and manufacturing industries. Sounds very noble and responsible and certainly hard to argue with the need to hone strategies to stimulate job growth in the state still struggling with one of the nation’s worst unemployment rates.

Meanwhile, back in the Statehouse, members of the Senate Labor Committee, certainly with the backing of Senate leadership, have been convening hearings on legislation which is truly at the heart of why Rhode Island can’t grow. Among a slate of union-backed bills now before the Labor Committees in both chambers, was a bill that seems designed to create a legal blockade around retiree health benefits, at a time when financially teetering cities, like Providence, may be approaching legal insolvency and seeking to reduce the billion dollar burden ($1.5 billion in health benefits to be exact) that the unfunded liability now places on it.

The bill the Senate Labor Committee was reviewing as of this writing, is one which may as well be entitled “Don’t touch my Health Benefits.” Cranston democrats Josh Miller and Hanna Gallo are sponsors of a bill which would require that health care benefits negotiated in retirement packages for municipal employees must “remain in full force and effect” regardless of developments in the “legal” (read: court bankruptcy/receivership) or “competitive-bargaining arena” (new contracts written in receivership scenarios).

New front in battle for union benefits

It’s clear the unions have opened a new front statewide in the battle to protect all negotiated retirement pensions and health care /OPEB’s (other post-employment benefits) as the financial condition of certain communities worsen. As the prospect of municipal bankruptcy grows more and more real in Providence City Hall and where bankruptcy-like decisions have been underway for nearly a year by two state-appointed receivers for the fiscally collapsed Central Falls, the unions’ worst fears of attempted benefit reductions are appearing vividly on the horizon—and they are crafting legal strategies, with the help of certain senators, to combat that.

It’s not unexpected. But members of the Senate Labor Committee who are accommodating the unions’ fears and advocating for the unions’ legislative maneuvers to directly block a potentially bankrupted city like Providence from having any legal option to reduce the enormous burden of retiree health care benefits, are working against the best interests of the state, plain and simple.

Just in the past few days, the Central Falls Receiver, former Justice Robert Flanders warned the city is days away from having no ability to cut payroll checks if immediate concessions on pay, pensions and retirement health care costs are not reached. Short of that, the city will go into federal bankruptcy. Union leadership should realize that type of scenario can produce concessions with or without their input or approval.

(It should be noted, there is a bill filed by Senate Labor Committee member Louis DiPalma (D-Middletown) which does propose elements of pension reform. S-0915, referred to the Finance Committee, would create a defined contribution plan system for certain current municipal employees and all future workers, but there’s no movement as yet on that bill.)

Senate should focus on pension reform, not business summits

State Treasurer Gina Raimondo has told numerous audiences in recent weeks that the state’s combined unfunded liability, between all state and municipal pension plans, now hovers at a staggering $13 billion (not to mention this week’s added bombshell that all communities are getting hit with steep new contribution requirements). Furthermore, and most importantly, Raimondo emphasizes the state’s overall pension debt is not “a” problem, but the problem facing the state and the one which holds Rhode Island back from the chance to recover from its sagging economy and grow strong again.

But it is the legislative leadership, not the Treasurer, who hold the power to truly address the problem. If state Senate leadership spent as much time crafting a strategy addressing the municipalities’ and state’s collapsing pension systems as they do steering through union-favored legislation to block any real benefit reforms–the state might actually have a chance at recovering from its present downward spiral.

The point is Senate President Teresa Paiva-Weed and other leaders can stage all the economic summits they want, but as long as they are accommodating the kind of legislation that is now before the Senate Labor Committee, they are not working in the best economic interests of the state.

Considering the pension debt headlines of the past few days, it’s a good thing they’re holding that summit in a hotel where a welcoming cocktail lounge is adjacent to the conference room. In Rhode Island, the bar business is one sector of the tourism/hospitality industry that seems destined to remain brisk.

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Donna Perry is a Communications Consultant to RISC, RI Statewide Coalition


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