Riley: What Happened to Rhode Island’s Municipal Pension Crisis?
Tuesday, October 13, 2015
What happened to Rhode Island’s municipal Pension Crisis? According to Gina Raimondo the Municipal Pension Crisis was a priority for the next governor. One of several “puff’ pieces on Raimondo in 2014 was an article in “Next City”. Upon reading this article you will notice that the Raimondo in the Governor’s office today is very different from the one who ran for office just a year ago. In this GoLocal column I have repeatedly pointed out the failure of Treasurer Raimondo to address the pension crisis and the financial condition of Rhode Island cities and towns. In 2011 Raimondo worked on the legislation that formed the “Municipal Pension Crisis Commission” headed by Chafee’s Revenue Director Rosemary Booth Gallogly. The commission was a farce, often not achieving a quorum. Its 12 members didn’t accomplish anything. Angel Taveras with nearly $2.5 billion in unfunded liabilities that nearly exceeded the States liabilities, didn’t even bother to attend. Johnston’s Mayor Polisena treated his appointment as a soapbox and used it to yell at “Ernie Almonte” yet Polisena never even turned in a final plan. Polisena and Johnston failed at every level to address his pension crisis. Auditor General Hoyle and Miss Raimondo, both commission members managed to miss the fact that Providence was lying about its pension assets all 3 years even though they held the evidence in their own hands. The commission dissolved a year ago after issuing a report to the Governor and General Assembly suggesting the same commission be a “permanent oversight committee”. Thankfully that didn’t happen. But what happened to Raimondo? Why doesn’t she care?
“… we could have waited and had more Detroits in Rhode Island.”
Today, city pensions are in a worse position than when Raimondo in 2012 warned of Central Falls domino effect. However in the years since RIRSA’s passage, there has been no organized state-level follow-up program to address those broken pension programs and the imperiled solvency of Providence other than the failed commission cited above.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIn 2014 the campaigning Raimondo said “she believes that the governor — whoever takes office in 2015 — needs to work directly with Rhode Island cities to confront the crisis. The city of Providence, she pointed out (cannily, given that her primary opponent was the city’s mayor) has only funded about 30 percent of its pension obligations.”
A 30% funded ratio? Not even close Governor Raimondo, Providence is actually funded at around 21%, the worst of any City of its size in the country. Raimondo has been personally aware that Providence has been lying about pension assets and liabilities for nearly 15 years. This misleading of Pension Beneficiaries’ financial condition and Municipal Bondholders violates Federal Securities law but she doesn’t seem to care. She even knew Providence that was secretly borrowing from the pension plan and paying plan contributions as much as 2 years late with 8.25% penalties. This was confirmed by City employees and was in black and white in the documents possessed by members of the Pension commission.. She had requested these documents from all the “crisis Cities” yet either covered up for Providence or didn’t bother to read the documents. I recently issued a report “Public Corruption and fraud in Providence Pensions” to various authorities including Rhode Island Attorney General Peter Kilmartin . He quickly responded saying “It wasn’t his jurisdiction” as he rejected the report without reading it. Here is the report : http://providencepensionplan.info/
So the Ms Raimondo of 2011 to 2014, who was so concerned about the many “Detroits” in our midst and said “the next Governor should immediately focus in early 2015 on the pension problem with City leaders”, has instead done nothing. I don’t think she has even uttered the words “Pension Crisis” in connection with any city in Rhode Island since she took office nearly a year ago. She has spent significantly more time in the last 10 months on Tourism ad campaigns, baseball stadiums and political fundraising than she has on “confronting” the insolvency and Pension crisis in Providence. As we close out 2015, Ms Raimondo’s words of 2014 appear to be just hollow promises and campaign rhetoric. Her lack of leadership regarding Providence’s pending bankruptcy betrays her reputation as a “problem solver”. Whatever happened to that courageous “pension lady”?
Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC News, Yahoo TV, and CNBC.
Related Slideshow: Timeline - Rhode Island Pension Reform
GoLocalProv breaks down the sequence of events that have played out during Rhode Island's State Employee Pension Fund reform.
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