We interviewed 2 Rhode Islanders now living in Indianapolis who are some of the very few New England Patriots fans found in Colts land. You’ll hear from Lori and Guy this week on. Eyewitness News!
Danielle North and Chief Photographer Les Breault and I have successfully received our NFL media credentials and are now Off to work.
Got back to the hotel and found this Welcome to Indiana packet, drawing from a local school student, water and two cookies! The student wrote that he loves Indiana’s weather, restaurants, and of course, football games! And yes, I realize there is only one cookie in the picture. That’s because I already ate one! It was good! A+ for Hoosier Hospitality so far!
Mike Stanton and Tom Mooney have a solid story in today’s Projo about the challenge Mayor Taveras faces in trying to claw back those hugely expensive pension COLAs granted back in 1989. What many people don’t seem to understand – including some powerful folks at the State House – is that Taveras can’t hammer out a deal with the unions because the unions don’t represent the retirees.
That’s not my opinion – it’s the Rhode Island Supreme Court’s. Here’s how the city explains it (emphasis mine):
The Rhode Island Supreme Court stated in Arena v. City of Providence, 919 A.2d 379, 389-390 (2007) that (a) the plaintiff retirees were not members of or represented by unions; (b) the plaintiff retirees are retirees and, as such, cannot be treated as employees as the United States Supreme Court found in Allied Chemical v. Pittsburgh Plate Glass, 404 US 157 (1971); and (c) the plaintiff retirees do not share a “community of interest” with active union members as current union members and retired members could have adverse interests. Note that these assertions were within the context of the Firefighters union attempting to “arbitrate” the COLA fight with the City. If the Court found the retirees to be union employees, the COLA benefits would have been arbitrable. The Court did not find the retirees to be union employees nor represented by the union and, as such, the dispute was not arbitrable.
Judge Flanders ran into exactly the same problem in Central Falls, which is why he had to send letters to all the retirees asking them to agree to concessions. (They didn’t, and he filed for bankruptcy.) Paul Doughty, the firefighters union president, says Taveras should still try and ask the retirees for voluntary concessions.
But long story short, if you hear someone say “Providence needs to sit down with the union” to figure out a solution to the pension problem, they’re either being disingenuous or just don’t understand the issue.
• Related: Chart: The decline and fall of the Providence pension system (Jan. 25)
We got our breakfast and coffee and we’re getting ready to pick up our media credentials for access to all things Super Bowl XLVI!! Bring it!
Our trip from Providence to Indianapolis took us through Baltimore. When asked we responded “Oh, we’re covering the Giants”
From the minute we stepped off the plane at the IIA it was apparent that the Super Bowl threw up all over the state of Indiana. I was trying to pretend that I was Peyton Manning walking through the terminal looking at hundreds of Tom Brady jerseys on one side, hundreds of Eli Manning jerseys on the other. Both star QB’s being showcased in the Super Bowl in the city that I own in the house that I built. I had to shake myself out of it as I approached the escalator because I started to consider stepping off the balcony instead.
If your a fan planning on traveling out for the big game, the first thing you’ll notice is how close everything is. Bars, restaurants, hotels all within walking distance of Lucas Oil Stadium and the convention center. The downside of a smaller city is that it seems to be overwhelmed at times. We pulled up to the hotel and they told us they had no parking spaces available. The valet sent me with a map, a compass and a pat on the back into the heart of downtown in search of a parking ramp. Alas I found one after moving three blocks in one hour. Apparently blocking four lanes of traffic for buses around the stadium tends to clog things up at one in the afternoon.
Other than that the city seems excited to be the epicenter of the sports world for a week. Eli seems to be the favorite for the locals. Although the waiter tonight did say he’ll cheer for Brady for this one weekend. Then he spit in my food and laughed…
We are on our way to Indy to continue our Super Bowl coverage. So excited to meet Southern New Englanders in Indy for the big rematch! Keep following our blog posts for up to date information and an inside look at how we bring it to you!
Good morning, Mr. and Mrs. Rhode Island, and all the ships at sea – happy weekend and welcome to the second edition of my new column. As always, send your takes, tips and trial balloons to tnesi (at) wpri (dot) com and I may include them.
1. I doubt that Governor Chafee will propose significant tax increases in his budget on Tuesday, especially after legislative leaders all but ruled out the idea at this week’s Chamber luncheon. I’m sure, though, Chafee’s budget will include some major cuts in spending on programs that have substantial – and vocal – constituencies, particularly in social services. Chafee, Gordon Fox, Teresa Paiva Weed and their deputies are banking on the hope that May’s revenue estimates will save the day and wipe out most of the $120 million deficit.
2. Nesi’s Notes editor emeritus Charlie Bakst passed along a bit of wisdom to keep in mind as we dive into a big election year: “Everything in politics happens twice: Once when it happens and again when they make a television ad about it.” Like many others, Bakst was also appalled by the New York Times exposé on how Apple treats its foreign workers.
The Rhode Island Republican Party says it may go to court in an effort to overturn what the GOP sees as a blatant attempt to save a vulnerable incumbent Democrat in Burrillville by redrawing his legislative district.
What has Republicans riled up is “the Keablemander” – the redrawing of House Districts 47 and 48 that would move Donald Fox, the Republican who lost to State Rep. Cale Keable by 196 votes in 2010, out of Keable’s district. The plan would shift four times more people than the 360 required by the Census, said Patrick Sweeney, the GOP’s executive director.
“From the testimony last night, it’s a purely political move with no independent basis,” Sweeney told WPRI.com. “There’s no natural, historic, geographic or any other consideration. It’s just, ‘We’re going to shift 1,500 people.’ It just doesn’t make sense.”
While many Republicans blasted the president’s address as a campaign speech, Doherty took a softer approach, saying he was “encouraged” by what the president had to say and hopes to see more cooperation and bipartisanship in Washington.
Doherty has endorsed Mitt Romney for president. Here’s the full statement he gave in response to a question from WPRI.com:
I was encouraged that President Obama chose to address the challenges facing middle class Americans in his State of the Union speech. I have always believed that actions speak louder than words and I hope that this administration now will shift its focus away from handouts to Wall Street and big corporations and instead promote a strong economy and secure jobs for the people of Rhode Island and our entire nation. We need comprehensive tax reform that closes loopholes for big business and levels the playing field for small business and the middle class. This will not be easy and will require leadership and bipartisan cooperation that goes far beyond seating arrangements and the rhetoric of class warfare. Like many Rhode Islanders, I am frustrated by constant partisan bickering and I am committed to bringing true leadership and a spirit of cooperation to Washington, DC and to restoring integrity and accountability to Congress.
Cicilline’s statement, which isn’t on his website, blamed the House Republican leadership for blocking the president’s proposals, but other than that didn’t sound markedly different from Doherty’s. Both called for changes to the tax code that would likely increase how much large businesses owe the federal government.
“Rhode Islanders want Congress to move beyond ideological differences to get things done for our country,” Cicilline said Tuesday night. ”Let’s put aside partisanship and send the president bills like these that will advance not just the interests of Democrats or Republicans, but of every American family.”
Illinois Issues reports on how a top Republican in the Land of Lincoln – a state that faces a larger pension shortfall than Rhode Island did – is trying to get the state to rally around its own version of Raimondo-Chafee:
“We’ve talked about pension reform in this state until we’re blue in the face. We know what needs to be done. We know that other states have done what we need to do, like Rhode Island,” House Minority Leader Tom Cross said during a recent news conference.
It is fitting that Cross would cite Rhode Island as an example, since it is the only state that has in recent years taken some controversial pension reform steps similar to a proposal from Cross. David Draine, senior researcher for the Pew Center on the States, called Rhode Island’s reforms “the only [recent] example of a state that really changed the terms of pension benefits for current employees.” …
Rhode Island had one of the largest funding gaps in the country relative to its size. The state operated its fund on a pay-as-you-go basis from the 1930s until the 1970s.
“Pension systems with really severe problems often started out as ‘pay-as-you-go’ plans, in which retirees derived their benefits from current state revenues, not any pool of accumulated cash. Inevitably, the number of retirees grew, relative to the number of current employees, and the checks going out the door took up a larger and larger portion of state revenues,” said a study of state pensions from the Pew Center on the States.
PROVIDENCE, R.I. (WPRI) – Treasurer Gina Raimondo acknowledged for the first time on Thursday that she may seek higher office in 2014, which will add to the heated speculation about her future plans.
Asked whether she would rule out a run for higher office in 2014, Raimondo told WPRI.com: ”As you know, I am obsessed with being a good treasurer and working as hard as I possibly can. But I’m not ruling anything out, no.”
Raimondo, 40, didn’t get more specific than that during a half-hour interview in her State House office, but speculation is widespread that she may run for governor in two years when independent Gov. Lincoln Chafee is up for reelection. She had $513,584 in her campaign war chest as of Sept. 30, more than any other politician at the state level in Rhode Island.
“We have a lot of work to do,” Raimondo said. “Pension reform was a huge step forward. I do think Rhode Island is being nationally recognized as a leader on one of the toughest issues the country faces, and saving $4 billion is a big nut – it’s big, no doubt about it – it’s big. But sure, there’s more to do.”
PROVIDENCE, R.I. (WPRI) – Rhode Island’s state pension fund earned a paltry 1.4% return on its investment portfolio last year, far below its target of a 7.5% annual return, WPRI.com has confirmed.
Treasurer Gina Raimondo’s office disclosed the figure for 2011, which is after expenses, in response to an inquiry on Thursday. The pension fund earned 12.5% in 2010, according to the House Fiscal Office.
“It’s really hard to manage money right now,” Raimondo told WPRI.com in an interview. She cited ongoing volatility in the stock market and the impact of the Federal Reserve’s low interest-rate policy on the state’s domestic fixed-income portfolio, which made up about 22% of the pension fund’s assets in 2010.
Rhode Island’s 1.4% return in 2011 beat the 1.1% return earned by the nation’s largest public pension fund, the California Public Employees’ Retirement System. California’s teachers pension fund grew 2.3%.
That’s the takeaway from an excellent bit of analysis by Jason Becker. ”A true COLA is key to ensuring that purchasing power is maintained throughout retirement,” he writes. “But the cost of goods has not increased 5% or 6% year-over-year ever in the past twenty years.”
Becker ran the numbers to compare what a Providence retiree with a $25,000 pension as of 1992 now receives thanks to 5% or 6% annual compounded cost-of-living adjustments, versus what the same retiree would now receive with a true COLA tied to inflation. Here’s what he found:
- Inflation-tied COLA: $46,132
- 5% annual COLA: $63,174
- 6% annual COLA: $75,640
Treasurer Raimondo made a related point at Tuesday’s local pension workshop, saying it’s important for pension plan fiduciaries to figure out what they’re actually looking to provide their retirees. Before last November’s new law, ”the Rhode Island retirement system was designed to provide an employee with more income at retirement than they got when they were working,” she said. “Is that retirement security?”
• Related: COLA means $796,871 pension for ex-fire chief if he lives to 100 (Nov. 30)
(chart: Jason Becker)
Fascinating story with a Rhode Island angle in The Wall Street Journal:
PROVIDENCE, R.I. — Wearing leg irons and guarded by federal agents, David Whitaker posed as an agent for online drug dealers in dozens of recorded phone calls and email exchanges with Google sales executives, spending $200,000 in government money for ads selling narcotics, steroids and other controlled substances.
Over four months in 2009, Mr. Whitaker, a federal prisoner and convicted con artist, was the lead actor in a government sting targeting Google Inc. that yielded one of the largest business forfeitures in U.S. history.
“There was a part of me that felt bad,” Mr. Whitaker wrote in his account of the undercover operation viewed by The Wall Street Journal. “I had grown to like these people.” But, he said, “I took ease in knowing they … knew it was wrong.”
The government built its criminal case against Google using money, aliases and fake companies—tactics often used against drug cartels and other crime syndicates, according to interviews and court documents. Google agreed to pay a $500 million forfeiture last summer in a settlement to avoid prosecution for aiding illegal online pharmaceutical sales.
A blog post by Congressman David Cicilline is being featured on The Huffington Post’s home page this morning, part of an effort by the freshman lawmaker to link his own economic proposals to this week’s State of the Union:
This week, President Obama offered Congress a plan to rebuild our economy with proposals focused on manufacturing, innovation, and workforce training proposals that I and many of my colleagues support and have already been working hard to advance in Congress. …
We need to ensure that states like Rhode Island, which are hurting more than most right now, can take advantage of new manufacturing opportunities and market conditions. That’s why I have introduced the Make It in America Block Grant Program Act to provide competitive grants to help small to medium-sized manufacturers hardest hit by the Great Recession retool, retrofit their facilities, and train employees so they can maintain their current workforce, create new jobs, and better compete in the 21st century economy. …
In 2011 there were a number of lost opportunities to work, in a bipartisan way, to address some of the great challenges we face as a nation. Instead, a faction in Congress brought us to the brink of defaulting on our financial obligations and attempted to hold up important proposals that benefit our middle class.
The post is up a day after Cicilline’s office issued a press release headlined: “Cicilline Calls on Boehner to Expedite Consideration of Make it in America Block Grant Program Act and Offshoring Prevention Act.” No word yet on Speaker Boehner’s response.
Johnston Mayor Joseph Polisena, a member of the new local pension commission, suggested Wednesday that the huge cuts in state aid to cities and towns are a key reason for the plans’ financial troubles.
There’s no doubt the roughly 75% drop in local aid since 2007 has made it hard for cities and towns to balance their budgets. But there’s also no doubt the 36 locally run pension plans were in trouble well before that.
Don’t take my word for it – look at the auditor general’s reports.
The first report looked at the 36 plans back in July 2007 – with most of the cuts in aid still to come – and at that point they were only 45% funded. The second report, in March 2010, found them 43% funded. The newest report last September said they were 40% funded.
Those numbers are clearly going in the wrong direction, but the situation isn’t radically different now than it was in 2007.
Indeed, Polisena’s own city of Johnston is home to two of the 36 locally run pension plans, and they were each only 31% funded back in 2007. Today they are 27% and 28% funded, making them the ninth and 10th worst-funded out of all three dozen.
• Related: 13 local pension plans worse than RI’s; Cranston, Scituate lag (Dec. 5)
Dry skies this evening..still thinking we have a chance for some flurries during the pre-dawn hours. Some of our higher resolution computer models hinting at this. Meanwhile storm across the Southern Plains heads our way early Thursday Night into Friday morning…with it will be milder air and mostly rain.
Sunday Snow??? It’s a long shot and if it happens it would be light. Most, if not all, computer models keep Sunday dry…but looking at the overall pattern across the United States and how the computers have been handling things beyond 4-5 days, I will keep light snow showers in for Sunday, but at this point a major storm is not likely.
The 14-person panel – which counts among its members Providence Mayor Angel Taveras, Treasurer Gina Raimondo, Department of Administration Director Richard Licht, RIPEC chief John Simmons and Cranston Mayor Allan Fung – spent the bulk of the meeting getting an overview of how pensions work from Joe Newton, the state’s actuary.
But it soon became clear just how much divides the group, and just what a struggle it’s going to be to reach agreement on different solutions for 36 different pension plans in various states of duress.
The problem starts with the basic question of what the commission is even supposed to do. The law creating it defines its mission only in general terms. Fung said he was “concerned” that the panel might push local pension funds to adopt the 7.5% rate of return forecast the state is now using, which could balloon their liabilities.
Textron Inc. climbed the most in more than two years after forecasting higher 2012 profit than analysts estimated amid growing demand for Cessna aircraft and Bell helicopters.
Textron jumped 15 percent to $24.85 at 10:48 a.m. in New York trading. Earlier the stock advanced as much as 16 percent, its biggest intraday gain since July 2009. Before today, the shares had lost 20 percent of their value in the past year. ….
Chief Executive Officer Scott Donnelly is working to leverage the company’s businesses with measures such as having Cessna and Bell share overseas service centers and sales forces. Textron is winding down its finance unit, which struggled during the recession.
“The 2012 guidance is a positive surprise,” since most investors expected a forecast slightly below estimates, Julian Mitchell, a New York-based analyst with Credit Suisse Group AG, said in a note to clients.
More details here, including the Garrahy family’s statement plus reaction from Jack Reed, Lincoln Chafee, M. Charles Bakst, Joe Fleming and Charlie Fogarty. Garrahy’s death comes the same week as the passing of Bill Dugan, his former chief of staff and close friend, who died Monday in North Providence at the age of 80.
Update: Statements from officials remembering Garrahy are flooding into the newsroom. We’re collecting them all on this page if you want to read them.
Update #2: The Journal has posted a nice obituary by Russ Garland. It’s interesting to read his comments about money in politics. Fun fact: Garrahy demolished Buddy Cianci in the 1980 gubernatorial election, winning 74% of the vote to the once-and-future mayor’s 26%.
(photo: University of Rhode Island)
Here’s a photo of Congressman Cicilline shaking Obama’s hand post-speech.
(I posted a CBS News poll with instant reaction earlier after misreading a tweet – it was from 2011. Mea culpa.)
It’s almost impossible to overstate the amount of damage done to Providence’s pension system by three decisions: the union-controlled Retirement Board’s costly COLA vote in 1989; Mayor Cianci’s consent decree agreeing to the COLAs in 1991; and the Rhode Island Supreme Court’s decision [pdf] upholding Cianci’s decree in 2000.
The crucial year on paper was 1996, when an earlier ruling first forced the city to acknowledge the pension benefits awarded in 1989 on its books. The city’s unfunded pension liability shot from $167 million to $412 million, and its funded level plunged from 64% to 41%.
Take a look at this chart – the bleeding hasn’t stopped:
Politico reports on today’s first session of the conference committee negotiating an extension of the payroll tax cut and long-term unemployment benefits – a group that includes Rhode Island’s own Jack Reed:
Several Democrats indicated they would prefer unemployment insurance not be paid for, arguing that doing so would negate any stimulative effect of the benefits.
Offsetting jobless benefits “blunts the economic impact of this tool,” said Sen. Jack Reed (D-R.I.).
But Republicans disagree.
“I would be remiss if I did not point out that unless we find a way to pay for these programs, we will be forced to borrow even more money from places like China — creating an even larger debt dragging our economy down,” said House Ways and Means Committee Chairman Dave Camp (R-Mich.), who also chairs the conference committee.
The Wall Street Journal reports on a local tragedy:
Although plenty of businesses got smaller last year, the North American wine industry actually grew a bit larger in size. According to research from WinesVinesData, to be released later today, 450 new wineries opened their doors in this country in 2011 – bringing the current count to 7,345 in the U.S., 465 in Canada and 24 in Mexico. …
Florida, Rhode Island and Montana were exceptions to the growth rule. Each state actually lost one winery.
Anybody know which winery closed?
Update: ”There is something a bit perverse about the idea of making wine in Rhode Island,” The New York Times wrote in 1989. The state had four wineries at the time: Sakonnet Vineyards in Little Compton, Diamond Hill Vineyards in Cumberland, Vinland Wine Cellars in Middletown and Prudence Island Vineyards on the island in Narragansett Bay.
How hard will it be to fix Rhode Island’s locally run pension mess? Really, really, really hard, apparently.
“I know this is going to be hard,” Treasurer Gina Raimondo told a roomful of local officials Tuesday as she opened a workshop to help them attack their pension problems. “I’ve got a few scars to show for it. But I also know we’re going to do it.”
“This is hard,” echoed Deputy Treasurer Mark Dingley, one of Raimondo’s closest advisers, as he walked the 50 or so officials through their legal responsibilities as fiduciaries.
“You have one of the toughest challenges of all, because you don’t have to be a rocket scientist to know how badly the economy has treated the state of Rhode Island,” agreed former New York Lt. Gov. Richard Ravitch, an invited guest who helped save New York City from bankruptcy in the 1970s.
“I don’t know what to say except I admire you for talking about this and dealing with it in an intellectually honest way,” Ravitch said. “Godspeed.”
According to the attendee sign-in list, Providence was the only one of Rhode Island’s 24 cities and towns with a locally run pension plan which didn’t send anyone to hear the presentations from Raimondo, former New York Lt. Gov. Richard Ravitch, Deputy Treasurer Mark Dingley, and asset consultant Allan Emkin.
Among the discussions they missed was Emkin’s detailed and bleak explanation of why it will be nearly impossible for pension funds to achieve the 8.5% average rate of return that Providence is expecting to earn year in and year out going forward. The city has defended that 8.5% target, saying it will be able to earn more than the state.
“The number that the state is using – 7.5% – we believe is reasonable, but it’s slightly optimistic,” Emkin said. He suggested the municipalities should use the state’s assumptions, and added: “Even the most aggressive public pension plan won’t get 8%.”
The share of Rhode Island workers who are unemployed or too discouraged to look is falling – at a snail’s place.
Rhode Island’s “underemployment” rate averaged 18.7% in the 12 months ended Sept. 30, down from 18.8% as of June 30 and 19% as of March 31, according to the U.S. Labor Department.
The underemployment rate averaged 8.8% between 2003 and 2007. It soared to a high of 19.4% in March 2010, then fell by less than a percentage point in the year and a half that followed:
The underemployment rate - officially called “U-6,” for its data classification name - counts not only those unemployed workers who are still looking for a job, as the official rate does, but also those who are only working part-time because they cannot find a full-time job.
For comparison’s sake, Rhode Island’s official unemployment rate averaged 10.9% in the 12 months ended Sept. 30, nearly eight points below the underemployment rate.
The U-6 measure is not released monthly, as the standard unemployment rate is, but rather as a 12-month moving average each quarter. (It was only done annually before 2009, which is why the chart above looks the way it does.)
• Related: RI jobless rate rises to 10.8%, but economist questions data (Jan. 20)