Outlook uncertain on non-MERS pensions
Although House Speaker Gordon Fox was vague last night in discussing possible changes to the pension overhaul bill, he was more candid regarding the 36 badly unfunded local pensions that operate outside the Municipal Employees’ Retirement System: “I don’t know if we’re going to make it in this round, quite frankly.”
State administration director Richard Licht, speaking with me shortly before the end of last night’s closed House Democratic caucus, was decidely more optimistic on the fate of including the non-MERS pensions.
Licht says he’s been meeting for the last week with municipal representatives, in part regarding their ability to suspend cost of living adjustments in the local pensions. “I’m hopeful we’ll reach agreement on language that meets their objectives,” Licht says, “and meets the objectives that went into the original legislation.”
For now, a fundamental difference remains between the state and some municipal leaders on suspending COLAs in the non-MERS pensions. Mayors like Angel Taveras of Providence and Allan Fung of Cranston want enabling legislation that would allow them to freeze those COLAs. If they don’t have the power to do that, the mayors say, soaring pension costs will force them to raise property taxes and cut municipal services. (And of course, the funding level of the non-MERS pensions — in the 40s — is well below that of MERS — in the 70s.)
The Chafee administration wants municipalities to go through a series of steps, including a formal assessment of their local pensions, before they would have the ability to cut COLAs.
And the issue of local COLAs is a muddier legal and political thicket, since the local pensions were set through collective bargaining, and because police and fire unions oppose freezing COLAs in the non-MERS pensions.
Fox has raised the possibility of passing the pension overhaul in two steps, starting with the state system, and taking up the local pensions after the new session in January. But if the second part of that would happen in an election year remains open to question.