Taveras: Pension bill lacks ‘any of the tools’ Providence needsOctober 19th, 2011 at 3:50 pm by Ted Nesi under Nesi's Notes
Providence Mayor Angel Taveras is less than impressed with the piece of the Raimondo-Chafee bill that deals with locally run pension plans such as his city’s massively underfunded system – a strong sign his side lost a battle that raged behind closed doors in recent days.
“Upon initial review, the pension reform bill does not provide Providence any of the tools we need to reform the city’s ailing pension system,” Taveras told WPRI.com in a statement Wednesday. “We will be meeting with leaders at the State House to discuss next steps.”
Taveras – along with at least nine other local leaders including Cranston Mayor Allan Fung – had pushed hard over the past week to get state leaders to include provisions that would allow major changes to the 36 locally run plans, a key priority of Governor Chafee’s.
Taveras’ statement made no mention of Raimondo and Senate President M. Teresa Paiva Weed, who both resisted including the stronger measures pushed by Taveras, Fung and the Rhode Island League of Cities and Towns that would let them override collective-bargaining agreements.
“We thank Governor Chafee and Speaker Fox for advocating strongly on behalf of the Capital City and understanding that comprehensive pension reform must include municipally administered plans,” Taveras said.
Earlier in the day, Fung also blasted the compromise that made it into the bill. It requires cities and towns to run new actuarial experience studies of their pension plans by April 1, with the state splitting the cost, and then to file plans for making them solvent with a new Solvency Review Team by Dec. 31, 2012.
“This is a very aggressive schedule with teeth in it, because it’s an urgent problem and we have to have it fixed,” Raimondo told reporters Tuesday, but “every one of these 36 plans is in a different spot” and their benefits are covered by union contracts, which therefore makes it legally questionable how much the state can do.
Once a city or town files a solvency plan, “then municipalities have to get to work to bargain for and address their individual circumstances,” she said. The treasurer singled out Providence for its 8.5% investment return forecast and its outdated pensioner mortality data as issues that need to be examined.
If a community’s proposed solvency plan doesn’t pass muster with the new review team, the state will have the right to suspend cost-of-living adjustments for retirees in the system once the current union contract ends. R.I. Department of Administration Director Richard Licht said he was confident courts would allow that.
Fung told WPRO the proposed new rules “mean I am going to have to come up with anywhere between $95 and $100 million to build up my assets to the point where I am 50% percent funded over a 10-year period,” adding that to do so would “crush the taxpayers” of Cranston.
Chafee defended the locally run plans proposal at a business-leaders breakfast on Wednesday morning, saying the final compromise struck a balance. “We have to be tough,” the governor said.
Raimondo, who joined Chafee on stage at the breakfast, reiterated that she thinks it “would be a mistake to legislate a one-size-fits-all solution” for the independent plans, which are not part of the state-run Municipal Employees Retirement System, known as MERS.
• Related: Chafee, Taveras plea for pension aid for ‘too-big-to-fail’ cities (Oct. 18)
(photo: WPRI/Tim White)