PROVIDENCE – Reform of troubled city and town pension plans will be on the Senate’s agenda in the coming year, President Teresa Paiva Weed acknowledges, but she will insist it be “sustainable, long-term structural changes, not simple quick fixes to the municipalities’ budget problems.
“That’s what we are trying to avoid,” she told The Call in an interview that looked back at the legislative year just past and ahead to the session that begins January 3.
Several mayors were unhappy that the statewide pension reform law passed in a special session in the fall did not include local plans that are not part of the state Municipal Employees Pension System (MERS). They had lobbied for, at a minimum, the power to temporarily suspend cost of living adjustments (COLA) they blame for large unfunded liabilities that they say are making the pension plans untenable.
“When you just look at a COLA, you are really just looking at piecemeal pension reform, in the same way this General Assembly did in the past, we didn’t look at the broader issue of pension reform,” Paiva Weed said. “Pension reform can not be looked at any longer as a way for mayors to solve their budget problems. It needs to be looked at as a way to ensure that employees will have pensions in the long term.
“Not all cities and towns are in the same shape as, say, Providence” whose unfunded liability is about the same as all other cities and towns with underfunded pensions put together, she said. “I anticipate that Mayor (Angel) Tavares and the governor, working with their legal counsel will have a full actuarial study done and come forward with a proposal.
Another factor to consider, the president noted, is that the statewide pension reform is saving all of the communities a significant amount of money with regard to pensions, particularly for teacher pensions.
Paiva Weed says she supported General Treasurer Gina Raimondo’s position that “one size doesn’t fit all” when it comes to fixing the troubled pension plans in some cities and towns and that Gov. Lincoln Chafee’s last-minute addition to the bill covering independent local pensions, which was removed before it became law, “had not had the requisite study done to support passage.
Some cities and towns do not have problems with their so-called “non-MERS” pensions, Paiva Weed said, and some that do are already taking steps to address them on their own. “We didn’t hear from every city and town” in the recent debate, she said, adding that mayors and city and town councils have to sit down with their union leadership and work out changes through collective bargaining.
The Senate president said she supports the concept of folding some of the local plans into the MERS system, but doesn’t want to force it on cities and towns. “Some of them don’t want our help. As a matter of policy, I respect the local communities that have negotiated contracts.
To simply enact legislation that is not going to withstand a challenge in the courts without the proper footwork being done as we did on the state level doesn’t make any sense.
There are no easy answers for the state or the municipalities and in my opinion that is what some folks are looking for.
She said what the state provided in the bill passed in November “was a path to take the same initiatives the state took in securing a full actuarial study and experience study so we can properly assess the problem.”
In one city where pensions have caused real problems, Central Falls, Receiver Robert Flanders says he has worked out a plan where police and fire retirees might be able to see a restoration of at least some of their pension benefits, which were cut by as much as 55 percent when the city went to bankruptcy court. But Flanders said that could require an infusion of as much as $2.6 million in state aid.
Paiva Weed would not commit to providing that funding, but said, “I absolutely support addressing the very inequitable situation right now in Central Falls. I am asking Finance Committee Chairman Dan DaPonte (an East Providence senator) to review the agreement. As to the specifics, I have not yet looked at the proposal, but I want to say without hesitation that I’m very happy there is an agreement, I support the public safety employees in Central Falls having some if not all of their benefits restored to the extent we are financially able to do so as a state.
Last year, Flanders asked the legislature for $4 million to keep Central Falls out of bankruptcy, but was rejected. Legislative leaders say that is because at that point there was not yet a plan to keep the city financially viable going forward.
Both Paiva Weed and Majority Leader Dominick Ruggerio agree that economic development will once again be the Senate’s top priority, building on successes of the past few years.
A joint committee on development of the state’s port facilities is expected during this legislative session, she said, and the chamber expects to work with the governor on a number of initiatives.
Ruggerio added that there are a number of economic development projects starting in and around the new “Knowledge District” in Providence where Route 195 was moved to create new space.