Providence pension panel says suspend COLAs, cap benefitsApril 19th, 2012 at 8:33 pm by Ted Nesi under Nesi's Notes, On the Main Site
This is the ballgame, folks.
After six months of work, the Providence City Council’s Subcommittee on Pension Sustainability released an inch-thick report Thursday night on the capital’s cash-strapped employee retirement system. The key section is this table on page 35 laying out the panel’s seven recommendations on how to stabilize the system:
Councilman David Salvatore, who has chaired the subcommittee since it was established in October, told WPRI.com he is hopeful the panel and then the full council will pass all seven recommendations. ”This isn’t about changing the rules; this is about preserving the retirement system,” he said. “If we do not make these substantive changes, there will not be a pension system for [retirees] one day.”
If the City Council approves the recommendations, it would almost certainly kick off a legal fight over whether the city government has the authority to do so, a question that probably will be answered by the Rhode Island Supreme Court in the end. If the courts eventually rule against the city and say retirement benefits cannot be changed, Providence will likely be forced to file for bankruptcy.
“We’re confident that it will be upheld in the courts,” Salvatore said. “There is a compelling public purpose argument that we are sticking to. It’s very different from 10 years ago, when this was [last] brought to court – the state of the city’s finances. We’re in dire straits. We’re confident that it will be upheld.”
• Related: Chart: The decline and fall of the Providence pension system (Jan. 25)