The Providence Retired Police and Firefighters Association is not happy with the Taveras administration.
City officials have failed to publicize the retiree association’s “counteroffer or alternative suggestions at helping the City of Providence save face and avert bankruptcy after years of fiscal mismanagement and failing to properly fund the retiree’s [sic] pension fund,” according to a letter from the group distributed to reporters on Wednesday by Andrews Law Offices in Providence.
The retiree group says its plan would have suspended all retirees’ cost-of-living adjustments (COLAs) for multiple years and eliminated the compounded 5% and 6% granted in 1989, saving the city almost $5.65 million per year, according to an actuary they hired.
The retirees also say they offered to settle a lawsuit headed to trial this month by allowing the city to move current retirees to Medicare at age 65, “while essentially keeping retiree health benefits intact.” They say the offer would have saved more than $2 million but the city rejected it.
Based on the retirees’ estimates, the two measures combined would save the city almost $8 million a year. Mayor Angel Taveras had said retirees needed to match the level of savings reached under the City Council plan he signed on Monday, which saves an estimated $16 million to $19 million a year.
However, the retiree organization acknowledged that because it is “not a bargaining agent, it cannot bind its members or non-members, though it can negotiate with the city and make recommendations.” The letter also claims the mayor’s chief of staff was considering increasing city taxes by $10 million as of April.
Separately, the deep-pocketed advocacy group Engage Rhode Island that gave crucial support to last November’s state pension overhaul came out in support of the changes in Providence. “We believe that the new ordinance constitutes a comprehensive approach to reform,” EngageRI said in a statement.
Update: A closer look at the numbers shows the retirees are only offering about a third of the savings Taveras said he needed. The letter lumps together pension and Medicare changes for almost $8 million in savings. But the pension changes on their own only save $5.65 million, an the mayor said he needed $16 million to $20 million in pension savings to balance the budget. He also originally wanted as much as $12 million in Medicare savings, while the retirees here say they offered about $2 million.
Update #2: David Ortiz, a spokesman for Taveras, issued this statement responding to the retirees:
We’ve negotiated in good faith with police and fire retirees to reach an agreement that protects the pensions retirees currently receive while achieving the savings needed to prevent Providence from eventual bankruptcy. The representatives that police and fire retirees designated to negotiate on their behalf have not presented an offer that comes close to achieving these savings.
The Taveras administration is moving forward to address Providence’s structural budget imbalance and put Providence on a sustainable fiscal path before it is too late. Providence’s taxpayers, active employees and largest tax-exempt institutions have all reached agreements that have the savings needed to help save the city. We have been unable to reach such an agreement with retirees. If Providence is forced into bankruptcy because of a failure to act, retirees would lose much more than annual raises.
The full text of the retirees’ letter is posted after the jump. If the city responds, I’ll post it here.