Can’t lawmakers fix the municipal pensions too?
As if pension overhaul in Rhode Island isn’t complicated enough already, a last minute dispute has cropped up between Genera Treasurer Gina Raimondo and Governor Lincoln Chafee about the breadth of change.
Chafee believes that the General Assembly ought to tackle the locally-run pension funds as well as the state employee retirement system. But Raimondo is so far backing only an overhaul of the state-run system.
Raimondo and Chafee have been on the same page for most of the pension debate, which began in earnest shortly after each took office in January. Raimondo has had a laser-like focus on the problems and deserves much credit for moving the problem to the forefront of the state government’s agenda.
But Chafee has a point on this one. Many of the local pension systems are in worse shape that the state system, which is close to 50 percent funded. And the canary in this coal mine has been the Central Falls bankruptcy, which has injected an urgency into the push to do something sweeping now.
So what happens if the state retirement system gets fixed. Does this mean lawmakers and Raimondo break out the champagne and declare victory while leaving the mayors and town and city councils on the hook?
What good does it do to repair the state system if the municipal systems are going to start falling like dominoes in the wake of the Central Falls fiasco. And is it really fair to slash cost-of-living allowances for state recipients but leave some of the worst abuses in the local plans untouched?
If lawmakers and Raimondo really want comprehensive reform how can they leave the locally-administered plans out of any solution. Especially when it is those pension systems that have the greatest short-term possibility of going belly-up or pushing up property taxes dramatically.
Some of the COLAS in the municipal plans are much more generous that what it in the state program For example, some public safety retirees in Providence are eligible for 6 percent annual COLAs, a figure that just about everyone knows is not sustainable. Would it be prudent policy to leave those raises intact while slashing COLAS for state retirees and teachers?
While Raimondo has done a fine job diagnosing the pension problems, it seems that Chafee has a point on the need to extend any overhaul to the municipally-run systems.