Treasurer Gina Raimondo has a message for members of Congress: don’t tax municipal bonds.

Raimondo and 41 of her fellow state treasurers sent a letter [pdf] last week to the top Republican and Democrat on the U.S. House Ways and Means Committee, emphasizing “the importance of maintaining the current tax exemption for municipal bond interest” as they consider plans to overhaul the U.S. tax code.

The letter was organized by the National Association of State Treasurers, which describes itself as “a bipartisan organization of state treasurers and other finance officials with similar duties.” The group said tax-free municipal bonds save states and municipalities an average of 25% to 30% on interest costs.

“The tax-exempt bond market has worked effectively for over a century,” Virginia State Treasurer Manju Ganeriwala, the association’s president, said in a statement. “Let’s not dismantle something that works.”

Raimondo, a Democrat, is considering a run for governor in 2014. Here’s her signature on the letter:

• Update: Fox, Raimondo pitch $70M loan fund for repairs (March 21)

The Rhode Island Clean Water Finance Agency’s motto declares, “Clean Water for Rhode Island is Our Only Business.” But that won’t be true for much longer if Treasurer Gina Raimondo and House Speaker Gordon Fox have their way.

Raimondo and Fox will hold a press conference Thursday morning where they’ll propose adding a new Municipal Road and Bridge Revolving Fund to the water agency’s portfolio of programs. They’ll be joined by Senate President Teresa Paiva Weed and municipal leaders, making this as close to a sure thing as any new legislative proposal can be.

So, you ask, what is the R.I. Clean Water Finance Agency?

The short answer: RICWFA is a quasi-public state agency, similar to better-known entities like the R.I. Economic Development Corporation and the R.I. Airport Corporation. While the Clean Water Finance Agency has a relatively low profile, it plays a key part in financing the maintenance of Rhode Island’s water system. Its basic role is to provide subsidized and low-interest loans to local governments that they use to fund water-infrastructure projects of all sizes.

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​By Ted Nesi

WOONSOCKET, R.I. (WPRI) – Officials in Woonsocket on Monday asked the cash-strapped city’s retirees to agree to give up annual increases in their city-managed pensions and move to Medicare or else risk pushing the city into bankruptcy.

Read the rest of this story »

• Related: Woonsocket’s problems include debt, botched 2002 pension fix​ (June 14)

The House Fiscal Office crunched the numbers on how much state aid Governor Chafee wants to give the cities and towns in his proposed 2013-14 budget: $80.3 million, up from a proposed $71.4 million this year (excluding K-12). That’s a healthy bump, but it’s still way less than municipalities were getting in 2006-07:

In theory the cities and towns could have made up for all the money they lost when the General Assembly axed the car tax reimbursement by immediately hiking drivers’ tax bills, but in practice that probably would have caused a mass revolt, so this was where the rubber met the road when a huge economic downturn collided with a requirement that governments balance their budgets.

In nominal dollars, House Fiscal says lawmakers hiked non-school aid to municipalities from $35 million in 1989-90 to $106 million in 1999-2000 and $202 million in 2004-05, then slashed it to $60 million in 2010-11. What the General Assembly giveth, the General Assembly taketh away.

​Update​: State aid to school districts, on the other hand, has climbed steadily over the past two decades except for a dip during 2008-09 and 2009-10 (with the much-discussed new funding formula taking effect in 2011-12):

Last week’s Target 12 investigation of Scituate’s absentee pension board has sparked a renewed conversation about how the state should handle its troubled locally run pension plans. “There is a concerning set of facts that you’re hearing about in Scituate,” Treasurer Gina Raimondo said on Newsmakers Friday. But, she continued, local officials need to negotiate with organized labor if they want to go into the state-run system (MERS).

Josh Barro, a columnist for Bloomberg View and longtime friend-of-Nesi’s-Notes, also sees a lesson in the Scituate investigation – most municipalities are just not equipped to handle the complicated task of managing a pension fund:

In most states, public employee pension systems are run either by the state government alone or by the state and a handful of the largest cities. For example, New York City is the only municipality in New York state with its own plans; all other cities and counties participate in two large statewide funds.

Pension systems are complicated, and overseeing them properly takes time and expertise. This is a heavy lift for municipalities overseeing small pension plans. …

Of the 110 statewide pension systems covered by the Public Funds Survey, the worst-funded is the Illinois State Employees’ Retirement System, with a funding ratio of 35.5 percent. Sixteen of Rhode Island’s 36 local plans are worse funded than Illinois SERS. …

The more promising long-term fix, floated by some Rhode Island lawmakers including State Treasurer Gina Raimondo, is to close municipal pension plans and have one pension system for municipal workers overseen by the state government.

Read Barro’s full piece here.

• Related: Raimondo: Move 36 local pension plans into state-run system (Jan. 30, 2012)

​By Ted Nesi and Tim White

SCITUATE, R.I. (WPRI) – Police officers in Scituate are criticizing a plan crafted by town officials that would make officers pay more for less generous pensions in order to help close an $8 million shortfall that opened up over the last decade.

Read the rest of this story »

• Interactive: Town-by-town map of local pension liabilities in Rhode Island (Feb. 4)

​By Dan McGowan

PROVIDENCE, R.I. (WPRI) – City officials have asked the General Assembly to increase municipal aid to Providence by between $4 and $5 million to help cover the city’s remaining structural deficit, Director of Administration Michael D’Amico said Monday.

Read the rest of this story »

​By Ted Nesi and Tim White

SCITUATE, R.I. (WPRI) – The officials charged with overseeing Scituate’s troubled police pension plan held next to no meetings for more than a decade, even as the plan’s cash shortfall quadrupled to $8 million, a Target 12 investigation has discovered.

Read the rest of this story »

• Interactive: Town-by-town map of local pension liabilities in Rhode Island (Feb. 4)

Rhode Islanders pay the 13th-highest state and local taxes in the country compared with their incomes, according to the latest analysis of Census data by the Massachusetts Budget and Policy Center.

The $6.9 billion in state and local taxes paid by Rhode Islanders in 2009-10 totaled 11.1% of their personal income, up slightly from 11.0% the prior year, the analysis shows. Just 12 other states took more of their residents’ income in state and local taxes, according to the group.

The national average was 10.6% of income, and Massachusetts ranked 25th at 10.2% of income, the analysis shows. Three other New England states – Maine, Vermont and Connecticut – took more of their residents’ incomes in taxes than Rhode Island did, while New Hampshire took the least.

The left-leaning Massachusetts think tank said it looks at taxes as a share of personal income rather than per capita because it “allows for a meaningful comparison among states.” Another group, the right-leaning Tax Foundation, ranks Rhode Island’s tax burden higher after making adjustments to the data.

• Related: Charts: Regressive RI taxes getting (slightly) more progressive (Jan. 30)

(chart: Massachusetts Budget and Policy Center modified by WPRI.com)

For more than a decade, state and local taxes in Rhode Island have been among the nation’s most regressive – meaning they’re structured to take a larger share of income from the poor than they do from the wealthy.

That said, a WPRI.com analysis of the last decade’s “Who Pays?” studies from the Institute on Taxation and Economic Policy shows the richest Rhode Islanders are paying slightly more of their incomes in state and local taxes than they were in 2002, while the poorest are paying a bit less.

That doesn’t necessarily contradict progressives’ argument that wealthier Rhode Islanders have gotten a tax cut: the studies show the share of income paid by the top 1% in income taxes fell from 5.8% in 2002 to 4.8% in 2013. But that reduction was offset by an increase in how much the top 1% paid in property taxes, which rose from 2% to 3.1%. Here’s how the tax mix for the top 1% has changed over the last decade:

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The Institute on Taxation and Economic Policy is out with its latest look at how much of their incomes different Rhode Islanders pay in state and local taxes, and the big headline hasn’t changed: the state’s tax structure takes almost twice as much from the poorest 20% of residents as it does from the top 1%.

Rhode Island families making less than $18,000 a year will pay 12.1% of their 2010 income in state and local taxes under current law, according to the study by ITEP, a Washington-based research group that is affiliated with the labor-backed nonprofit Citizens for Tax Justice.

At the other end of the spectrum, Rhode Island families making $378,000 or more a year will pay 6.4% of their 2010 income in state and local taxes when the federal deduction for those taxes is taken into account. An analysis by WPRI.com of ITEP’s reports shows that since 2002, state and local taxes have gone up or stayed steady for the top 60% of taxpayers while decreasing slightly for the bottom 40%:

(The 2010 income for the lowest 20% was less than $16,000; for second 20%, $16,000-$27,000; for middle 20%, $27,000-$42,000; for fourth 20%, $42,000-$72,000; for the next 15%, $72,000-$141,000; for the next 4%, $141,000-$328,000; and for the top 1%, $328,000 or more.)

Rhode Island is among 10 states that levy the highest taxes on the poor and is the only New England state in that group, according to the study. It is also one of only three states in the U.S. where the Earned Income Tax Credit isn’t fully refundable, which means Rhode Island families with no income tax liability cannot receive the benefit of the credit, the study says.

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Raimondo speaks at a Bond Buyer dinner

Here’s a rare silver lining to Rhode Island municipalities’ financial troubles: it’s made so much news that a two-day conference on distressed communities is coming to the capital city.

The financial newspaper The Bond Buyer will hold its 2nd Annual Distressed Municipalities Conference on March 18 and 19 at the Omni Providence Hotel (formerly the Westin). Treasurer Gina Raimondo, who received an award at a Bond Buyer dinner in December, is one of the headliners.

Bond Buyer publisher Michael Stanton told WPRI.com its major events are usually held within the Northeast Corridor, where institutional investors are concentrated, and in places that are geographically accessible to government leaders.

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Moody’s Investors Service is criticizing Providence leaders – and, implicitly, Superior Court Judge Sarah Taft-Carter – for running a $15 million operating deficit during the 2011-12 fiscal year, but softened its criticism based on other steps the Taveras administration has taken.

“The shortfall is credit negative as the city’s financial position has weakened considerably over the past four years,” Moody’s analyst Vito Galluccio wrote in a note to investors. “However, its balanced budget for [fiscal] 2013 indicates some progress toward restoring fiscal stability.”

Galluccio cited two big drivers of the $15 million operating deficit: Taft-Carter’s mathematically flawed ruling last year that the city didn’t need to move its retirees to Medicare, and various types of tax revenue failing to meet the city’s projections. The deficit would have been even larger if the city hadn’t shorted its 2012 contribution to the Providence pension fund by $5.4 million, he said.

“The 2012 results follow several years of operating deficits that have left the city in a precarious financial position,” Galluccio said. He blamed the fiscal crisis on a $125 million reduction in state aid during former Mayor David Cicilline’s second term and “rapidly growing expenditures related to employee salaries and benefits.”

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Well, in the end Providence didn’t file for bankruptcy – an outcome that loomed as a very real possibility last winter when the city’s cash flow crisis was most acute (and a confused Judge Taft-Carter made things worse). The final audit shows Providence finished fiscal 2011-12 with an $11.4 million deficit.

The Taveras administration acknowledges the city budget still has a built-in $4 million structural deficit, though that’s way down from the $110 million shortfall his fiscal review panel originally found. So how did the mayor eliminate 96% of the structural deficit? Here’s a chart from the city with their breakdown:

(“Revenue enhancements” has to be one of my least favorite bits of political spin. I don’t expect press shops to switch to “Job-killing tax hikes,” but what about plain old “Revenue increases”?)

Fixing Rhode Island’s local pension plans is going to make the state overhaul look like a cakewalk.

The 36 locally run pension plans, many of them underfunded, have become a growing burden on municipal taxpayers and a source of concern for retirees thanks to years of shoddy management. Last fall the General Assembly ordered the communities to study the problem and deliver solutions to a new commission, but Democratic state legislators have refused to sign off on cost-of-living freezes, citing labor contracts.

The towns’ solutions were due last week, and all but six communities complied. But the commission members don’t sound confident that real progress is in sight, Randy Edgar reports for the Projo:

In the long run, shifting troubled locally run plans into the state system would address many of the issues that got the plans into trouble in the first place. Retiree benefits would have to match those of other cities and towns in the state-run system, and cities and towns would have to make full “annual required contributions” each year to replenish low fund balances and keep up with annual payouts.

But as some members of the Locally Administered Pension Plans Study Commission noted Monday, forcing such moves would raise a host of potential problems. …

[T]he prospects for getting all of those plans adopted, and in some cases negotiating concessions from local unions, is far from certain.

“What we’re trying to figure out is what happens if that doesn’t work,” [commission Chairman Rosemary Booth Gallogly, director of the state Department of Revenue,] said. “Are we just going to keep meeting for the next five years and saying, ‘Well now you’re not 30 percent funded you’re only 22 percent funded, well now you’re not 22 percent funded you’re only 16?’ At some point we have to make people do something.”

To understand why Gallogly is concerned, look no further than Cranston, where Mayor Allan Fung wants the City Council to reduce benefits before its 18% funded pension plan runs out of money; Treasurer Gina Raimondo has suggested he should consider “a buyout scheme.” Yet lawyers for the retirees say the city can’t do what Fung is proposing, Mark Schieldrop reports for Patch:

The City Council met behind closed doors last night to talk with city lawyers about the mayor’s plan to cut pension benefits for police and fire retirees. …

The plan offers four possible options to save the failing pension plan, each recommending a freeze on cost of living adjustments (COLAs) for 10- to 15-years or a permanent freeze.

James E. Kelleher, a lawyer representing the retirees, told the council that the situation has echos of a legal dispute in 2003 that began when the city arbitrarily changed COLAs and other benefits for retired firefighters without going through the collective bargaining process. The city was taken to court and lost, Kelleher said. And the city did not appeal, which made the ruling a “final judgement,” he said. …

If the council acts, Kelleher warned, retirees would seek a Superior Court injunction ruling the City Council was in violation of a court order based on the Judge Daniel Procaccini’s ruling earlier in the decade that states any change to retiree benefits must be accompanied by collective bargaining.

Rhode Island’s early November deadline for cities and towns with underfunded local pension plans to file proposals for shoring them up has come and gone, but six municipalities failed to comply with the deadline.

The six stragglers: Cumberland, Johnston, Narragansett, North Providence, Pawtucket and West Warwick.

The places with punctual pension plans: Bristol, Coventry, Cranston, East Providence, Newport, Portsmouth, Providence, Scituate, Smithfield, Tiverton and Warwick. You can download the PDFs of their funding improvement plans from this Web page. Seven others didn’t have to file a plan.

All these funding-improvement plans, and the earlier actuarial studies, were required under last year’s state pension law, which was signed a year ago Sunday. Governor Chafee’s office says state officials continue to work with the municipalities who haven’t produced a plan yet.

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

Former Auditor General Ernie Almonte delivered a 20-page report on Pawtucket’s pension and retiree health plans to Mayor Donald Grebien on Thursday, eight months after Grebien asked him to lead an ad hoc commission studying the issue.

“The City of Pawtucket has a seriously underfunded pension system and an unfunded OPEB (other post retirement employee benefits, e.g., health insurance),” the report says. It lists a long list of options for dealing with the problem, including larger contributions from the city and suspending pension cost-of-living adjustments (COLAs) until the plan is 80% funded.

Grebien described the report as “impressive in its scope and depth,” and said he will review its findings “with his administration and finance directors, in conjunction with union leaders, to determine options and recommendations that will be sent to the City Council for approval as required by the state.”

Click here to download the full Pawtucket pension report as a PDF. (Under last year’s pension overhaul, Rhode Island cities and towns are required to submit plans for shoring up their pension plans by next month.)

• Related: Pawtucket panel plans 6-week sprint to solve pension problem (Feb. 23)

Just 13 states have increased school spending since 2008, a new study shows – and Rhode Island is one of them.

Despite five-and-a-half years of economic malaise, Rhode Island boosted K-12 spending by $137 per student between 2007-08 and 2012-13, according to the study by the Center on Budget and Policy Priorities in Washington. That’s a five-year increase of 2.7% after inflation.

Much of that extra money just arrived.

The study shows Rhode Island hiked per-student education spending by an inflation-adjusted 9.5% this fiscal year, a bigger percentage increase than any other state. Spending is up $452 per student in Rhode Island for the 2012-13 school year.

Rhode Island adopted a new education-funding formula in June 2010 to allocate K-12 money to school districts, ending its run as the only state in the nation without such a formula. The previous formula had been abolished 15 years before.

“Research from all over the country has shown that low incomes tend to be linked to more expensive services in schools,” Senate Education Committee Chairwoman Hanna Gallo said at the time. “This formula recognizes that link and addresses that challenge. This formula ensures that each school district gets the funding it needs to support its students.”

Education Commissioner Deborah Gist, who was appointed by Governor Carcieri and retained by Governor Chafee, was one of the leading advocates for the new formula. This past June, lawmakers agreed to allocate extra money to the education formula as proposed by Chafee and Gist.

• Related: Moody’s praises RI school funding hike, warns on Woonsocket (June 27)

Bond Buyer reporter Paul Burton has been keeping an eye on Rhode Island and its myriad financial problems, and over the past week he weighed in with not one but two lengthy stories about the state.

The first article, published Thursday, is “Under Chafee, Rhode Islanders Tackle Fiscal Woes,” and it focuses on the new pension law and efforts to stabilize distressed municipalities like Providence, Central Falls and Woonsocket. Burton interviewed Chafee, who called the various problems “icebergs,” and also spoke with investors:

“Rhode Island, in a way, is the poster child for trying to resolve distress, whether it involves getting a community out of bankruptcy or pooling resources to save money,” said Natalie Cohen, managing director and head of municipal research for Wells Fargo Securities in New York. …

“Because of the weaker communities, investors are staying away from even the stronger credits,” said [William Fazioli, a senior management consultant in the Providence office of Philadelphia consulting firm PFM Group Inc. and] former East Providence city manager. “The interest rate is higher, even for the more highly rated communities.”

“There is still a great deal of credit stress,” said Naomi Richman, a managing director at Moody’s, which last December issued a special report on municipal struggles in Rhode Island. “Most of the factors that were discussed in December are still evident to a certain degree.” …

Analysts and government observers alike say few governors if any have spent as many hours [as Chafee] on municipal matters.

“He seems to be paying attention to his knitting, that’s for sure,” said Alan Schankel, a managing director at Janney Capital Markets in Philadelphia. “Rhode Island, of course, has some economic issues. But everyone there seems to be pulling the oars in the same direction.”

An article Monday – “Central Falls, R.I. Could Exit Bankruptcy Next Week” – is a straightforward examination of how Rhode Island’s smallest city managed to avoid the sort of grinding slog through bankruptcy reorganization experienced by Vallejo, Calif.:

“One of the reasons why we’re so close to exiting bankruptcy is the extra attention we’ve gotten from the leadership. They profoundly understood the problems that a city faces. Both of them understood the goals and never wavered from the problem. There was no ego, no attitude,” [Central Falls attorney Ted] Orson said, naming Gallogly and Chafee. …

Moody’s analyst Vito Galluccio warned that Rhode Island municipalities still face serious challenges. “Although there has been some stabilization and helpful intervention from the state, we still expect some challenges for cities and towns,” he said, citing a slow recovery, stagnant tax bases, property tax cap limits and a high unemployment rate. “They’ve been proactive, but there are still a lot of risks and we will continue to monitor them.”

Orson called the Central Falls case a game-changer. “It changes the communication that cities have with their stakeholders. Before Central Falls, when cities negotiated with stakeholders, there was a strong feeling that cities did it without an ‘or else’. Central Falls has made it very clear, at least in Rhode Island, that there is an ‘or else,” he said. …

“What Ted [Orson] did in Central Falls is no different than how a professional services firm runs an engagement. Central Falls is doing it differently than the folks in Jefferson County, [Ala.,] and Vallejo, [Calif.,] who just threw up their hands and said, ‘We’re bankrupt,’ ” said [Gary Lewis, a private-sector financial consultant in Scranton, Pa.], who has been trying to convince officials in distressed Scranton to seriously consider filing for bankruptcy.

The hearings on Central Falls’ bankruptcy case are scheduled for next Thursday and Friday.

The police union in Bristol is trying to convince town officials to move their officers out of the state-run Municipal Employees Retirement System (MERS) and back into the town’s underfunded locally run pension plan [pdf], which was closed to new hires in 1998.

The union hired an actuary from Milliman to help them make the case – here’s her slideshow:

What do you think?

Cate Long, the sharp analyst who writes Reuters’ Muniland blog, added her voice Wednesday to the chorus criticizing New York Times columnist Joe Nocera for misleading readers about Woonsocket’s problems:

Maybe it’s true that Brien was primarily motivated by ideology, but if Nocera had taken even a cursory glance at the financial statement for Woonsocket, he would see Brien’s position has some merit. Spending on retiree benefits and municipal debt are drowning Woonsocket. The city is in a death spiral. …

The real deficit sinkhole for the town lies in its Other Post Employment Benefits (OPEBs) and expenses for its debt service. OPEBs, or health and dental benefits provided to city retirees, cost the city $4.5 million, or 3.2 percent of the budget. That amounts to $10,135 for each of Woonsocket’s 450 retirees. Debt service cost the city $16.9 million in 2011, or 12.2 percent of its $139 million annual budget. Those costs will jump to $21 million for 2012 and remain at that level through 2016.

Long – who also opposes Rhode Island’s 2010 bondholders-first law – builds on the critique made by Bloomberg View’s Josh Barro, who on Wednesday explained why Woonsocket’s decision to sell $90 million in bonds to fund its pension plan now looks like a major mistake. Read Long’s entire post here.

Stepping back from this week’s ALEC controversy, the posts by Barro and Long (plus this one here on WPRI.com) illustrate the huge challenge facing Woonsocket’s new budget commission as it tries to put the city’s finances in order. As Long notes, about 15% of Woonsocket’s city budget can’t be adjusted at all because it’s debt service, and less than 80% of it “goes to tangible public services for Woonsocket residents.”

Perhaps a different way to look at the issue is by asking this question: What percentage of a municipal budget should be spent on employee retirement benefits and payments to bondholders?

• Related: Lots of pushback to Joe Nocera’s ALEC-in-Woonsocket column (June 19)

Woonsocket’s financial turmoil has led to much discussion about the example of Central Falls, which first entered receivership in May 2010 and filed for bankruptcy in August 2011. One lesson from the tiny city – there’s probably no way Woonsocket residents avoid a big increase in their tax bills over the coming years.

This chart shows total property taxes levied in Central Falls from 2008-09 through 2015-16, the last year projected in its court-ordered restructuring plan. Taxes will jump nearly 35% citywide before inflation:

Taxes are already high in Woonsocket when compared with other cities, though.

Another chart included in Central Falls’ bankruptcy filing shows effective tax rates for six distressed communities in 2010-11, adjusted for income; Woonsocket is the most-taxed by that measurement:

Considering Woonsocket’s proposed supplemental tax died in the House last night, this seems like an opportune time to revisit Revenue Directory Rosemary Booth Gallogly’s comments about the city’s situation last Friday on WPRI 12′s Newsmakers:

It’s no secret that the finances of Central Falls and other troubled Rhode Island cities have been woefully mismanaged over the years. With state leaders continuing to wrestle with how to fix them – and desperate to avoid more bailouts and interventions – it may be time to abolish these governmental units altogether, Josh Barro writes for Bloomberg View:

When a headline-grabbing event occurs, such as the exposure of Bell’s outrageous salaries or the exhaustion of the Central Falls pension fund, these cities get state-level attention and supervision. But that typically comes only after corrupt officials have had years to mismanage and exploit their cities.

The best way to protect residents of these impoverished places is to end the jurisdictions in their current form, reconstituting them in such a way that officials are more likely to be held accountable. Three such options are dissolution, merger and state takeover.

Meanwhile, Governor Chafee’s office just announced that Robert Flanders is out as Central Falls’ receiver after shepherding the community through Chapter 9; John F. McJennett III, who was chairman of DEPCO, will take over. Last night, legislative leaders signaled they will pony up $2.6 million to pay for a settlement with Central Falls’ retirees to restore part of their pension payments, which should close out the bankruptcy.

A little more than a decade ago, West Warwick’s pension plan was almost fully funded. Or was it?

It sure looks that way on paper. According to the town’s actuary [pdf], the West Warwick pension fund was 96% funded in 1999, meaning the town had almost all the assets needed to pay future benefits. In dollars, the town had $43.8 million in assets to cover $45.4 million in liabilities, leaving a very manageable-looking shortfall of $1.6 million.

By 2010, the most recent year available, the West Warwick pension fund was just 26% funded, a stunning 70-percentage-point drop in 11 years. The town’s pension assets had shrunk to $35 million and its liabilities had ballooned to $133 million, creating a jaw-dropping $98 million shortfall. That’s up $96 million in 11 years.

It’s appears to be a clear-cut case of responsible local leaders getting replaced by profligate knaves – until you read this actuarial footnote buried deep in the town’s financial documents (emphasis mine):

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By Ted Nesi

WEST WARWICK, R.I. (WPRI) – The bankruptcy on the Blackstone River hung over West Warwick High School’s auditorium Tuesday as town leaders got a dire warning from state officials: their pension fund for 654 active and retired police officers, firefighters and town workers is on track to run out of cash within five years.

Read the rest of this story »

The Providence City Council may be uncertain about the pension changes it just passed, but Moody’s isn’t.

“The ordinance is a credit positive because it provides current and future year budgetary relief to the financially strained city, although labor unions are likely to challenge the new law since it conflicts with existing collective bargaining agreements,” Moody’s analysts Susan Kendall and Geordie Thompson wrote Tuesday in a note to investors obtained by WPRI.com.

The pair described the pension overhaul as another sign that Mayor Angel Taveras and the City Council are taking difficult steps to avoid bankruptcy, saying it “demonstrates city management’s strong willingness to cut its long-term obligations despite resistance from employee groups and the threat of litigation.”

They also noted that last week Taveras reached deals with tax-exempts Brown University and Lifespan for an additional $33.9 million worth of payments over the coming years, which the administration “projects … will bring its 2012 and 2013 budgets into balance, although its reserve position and liquidity will remain weak.”

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By Ted Nesi

PROVIDENCE, R.I. (WPRI) – The Providence police union is threatening all-out war on Mayor Angel Taveras and the City Council for freezing retired officers’ pensions, labeling the elected officials “underhanded, despicable and heartless” for holding a crucial vote the night of a fallen officer’s wake.

“Their actions that night and the following Monday showed what we mean to them …………ABSOLUTELY NOTHING, JUST A NUMBER!!!!” the executive board of Fraternal Order of Police Lodge #3 wrote members last week in an email obtained by WPRI.com. “The old saying ‘action speaks louder than words’ is so true, and their actions came through loud and clear and it sounded a lot like SCREW YOU!!!”

The City Council voted unanimously to approve the sweeping pension overhaul on April 26, the night before Sgt. Maxwell Dorley’s funeral. ”The audacity of the Mayor and City Council to do such a thing on the night that we waked one of our own, who died in the line of duty for this City is underhanded, despicable and heartless, and a slap in the face to all of us,” the police email said.

In a statement on Friday, Taveras told WPRI.com it had been “a very significant and emotional week for all who work in the city of Providence. Those who serve our city know better than most the history that led Providence into this crisis.” (more…)