Moody’s: Local RI pension plan costs ‘reaching a crisis point’

December 19th, 2011 at 9:58 am by under Nesi's Notes, On the Main Site

Will pension triumphalism trump the need to fix the local plans?

That’s certainly the fear of Governor Chafee, Providence Mayor Angel Taveras and Cranston Mayor Allan Fung. Their last-ditch effort to tackle the 36 locally run plans in the new pension law failed, and Chafee told me last week he’s deeply concerned lawmakers won’t want to deal with them in next year’s session.

But they may not have an option, if a new report from Moody’s is any indication (via Bloomberg):

Rhode Island communities face more credit-rating cuts as the local economy declines, property values plunge and pension liabilities rise, Moody’s Investors Service said, citing sharper trends than in most states.

The growing cost of retirement benefits is “reaching a crisis point” for many of its local governments, Moody’s said in a report released today. …

“A lot of national negative trends are particularly acute in Rhode Island,” Naomi Richman, an analyst at the credit rating company in New York, said by telephone before the report was released.

The trend for 2012 is “likely to favor downgrades,” and there will be “few if any upgrades,” Moody’s said in the report. It also warned that a state oversight program, set up in June 2010 to help municipalities facing financial pressures, is untested and may be overwhelmed by multiple simultaneous requests for assistance.

Awesome!

• Related: 13 local pension plans worse than RI’s; Cranston, Scituate lag (Dec. 5)

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9 Responses to “Moody’s: Local RI pension plan costs ‘reaching a crisis point’”

  1. Ed says:

    It is time for many of these cities and towns to file chapter 9. Too bad so many Rhode Islanders have no clue what Moody’s credit rating means to the state. First of all no business will set up shop with in a municipality that has a declining credit rating. The people who run these companies know the tax climate is not stable. Next, their are too many people of Rhode Island that collect tax dollars either as so called compenstation, or as social service money. You people call them entitlements, no one is entitled to other peoples money. You people have to start cut public spending, then cut taxes and both have to be done drastically.

    1. Cosmo says:

      Ed I like the way you think.

    2. Al Moncrief says:

      Of course, Chapter 9 doesn’t always mean that things turn out the way elected pension thieves would like them to. (See Valejo, CA), years of litigation, local taxpayers pay millions in legal fees, contracted retiree pension benefits unscathed. Also, look for the state’s attempt to place bond holders ahead of contracted pension obligations to be struck down.

      1. Tough Love says:

        Valejo, CA’s bankruptcy left it’s pensions intact ONLY because the City Managgers(STILL in the Union’s pocket) CHOSE to do so. They could have halved or quartered the pensions (to the benefit of ALL Citizens).

  2. bob says:

    So, are the legislators working on local pension relief? I thought it was ‘pedal to the metal’ on this.

    1. bob says:

      Oh, my skimming methods failed me this time. I see they aren’t doing squat right no.

  3. Tough Love says:

    I believe that even if RI’s Pensions were cut by 50%, they would still provide (as a % of final pay) equal (and likely better pensions, due to COLA increases and earlier full retirement ages) than those received by the vast majority of RI’s Private Sector taxpayers.

    If Public Sector “cash pay” is no lower than their Private Sector counterparts, then there is ZERO justification for greater pensions and benefits. It was simply an unfair (to Taxpayers) deal cut by Politicians to curry campaign contribution and election support from their Public Sector Union paymasters.

    We’re just getting back to what “should have” been promised in the first place.

    The lesson here is that Civil Servants must save OUTSIDE their pension (just like everyone else), because promised pensions, so rich that such saving is not necessary, will like NOT be fully paid ….. at least NOT by Taxpayers who finally understand that THEY are being ripped off to pay for it.

  4. Al Moncrief says:

    THE RHODE ISLAND CULTURE . . . MISMANAGE THE PENSION, STEAL FROM STATE RETIREES TO COMPENSATE FOR HISTORIC ELECTED OFFICIAL INEPTITUDE. . .

    the obvious next step is to steal from local retirees to compensate for local elected official ineptitude. Let’s carry this to its obvious conclusion, in the future when the state has any budget shortfall, simply resort to further theft, raid bank coffers in the state, sieze other types of private property . . . however, we’ll need Raimondo to lead the charge and encourage the Legislature to enact a bill declaring all of this further theft perfectly legal.

  5. [...] its Risk of Recession Index on Dec. 19, the same day the firm’s credit analysts released a report on local pension plans in Rhode Island that cited November’s 59% probability of a double-dip in the [...]