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Who’s playing “a huge game of chicken” in Providence?

May 3, 2012

For all of Providence Mayor Angel Taveras’ accomplishments this week, investors remain skeptical about the city’s outlook. And though city officials believe they have a strong legal defense, a successful court challenge of this week’s pension overhaul could send the city into bankruptcy. That led Paul Doughty, president of the Providence firefighters’ union, to say this about the Taveras administration (via Bloomberg):

It’s a huge mistake. If they lose this in court, almost certainly they will end up in bankruptcy. They’re playing a huge game of chicken.

Observers more sympathetic to Taveras see a lot of irony in Doughty’s statement — since a US Bankruptcy Court judge could sharply cut union members’ pension benefits if his Local 799’s anticipated lawsuit is successful. Under that theory, Local 799 and other litigants would be the ones playing “a huge game of chicken” with the city.

As Ted Nesi reports, a similar view was expressed by Donald Iannazzi, business manager of Local 1033, the largest city union, who criticized police and fire retirees for being intrasigent:

“As I have attempted to communicate with others, we are in the bottom of the ninth inning and failure to act NOW will result in an irreversible path that will cause adverse actions to the benefits received by our retired and active members, as well as every citizen of our city,” Iannazzi continued.

Doughty doesn’t buy it (nor does Joseph Penza Jr., the lawyer for police and fire retirees). Doughty told me:

In Bankruptcy Court, according to our research, no municipal bankruptcy has taken a pension away from a pensioner, and that has a lot to do with the higher status that they’re given as a property right.

And to take it away raises constitutional  issues related to both the Fifth Amendment for an unlawful taking, and also the contract clause. So they’re given a much higher status.

As Doughty notes, pension cuts in Central Falls stemmed from an agreement.

The union head nonetheless holds out the possibility of “a perverse result” if a legal fight over pension cuts lead Providence into bankruptcy, and he says the City Council didn’t adequately vet the issue:

 The whole thing that started this was the pension. At the end that may be the only thing that’s sacrosanct.

Doughty says he expects Local 799 to decide its legal plan over the next week or two. He says he’s assessing whether the union’s most effective move would be a grievance, an unfair labor practice complaint to the state Labor Relations Board, or a Superior Court lawsuit.

4 Comments leave one →
  1. Mister Guy permalink
    May 3, 2012 9:17 pm

    Hmmmmm, sounds like the Providence Police & Fire Department unions have been negotiating in good faith with the City of Providence, but, for some reason, the City hasn’t been responding in kind. The union’s recent offer to permanently give up unreasonably high compounded COLAs (and even all COLAs for a number of years) & switching retirees onto Medicare are proposals that should have been taken seriously by the City, especially since the City is on its way to losing court cases over illegally switching retirees to Medicare & ending their COLAs. The City (like many other municipalities in RI) has apparently, unfortunately not lived up to its end of the bargain (to apparently the tune of hundreds of millions of dollars over the years) when it came to adequately funding its retirement system.

    Requiring employees to contribute to their pension system as long as they are accruing pension credit is a reasonable change IMHO, but it should be negotiated with the unions in good faith, not illegally imposed from above. Shared sacrifice is the real answer to the City’s financial problems, not just soaking union members.

  2. Jim permalink
    May 4, 2012 6:53 am

    Bankruptcy is the only clear solution; let it burn. The hacks in the General Assembly haven’t lifted one unfunded mandate from any city or town despite their declared understanding of the fiscal devastation blanketing RI. Chafee’s plan for the few municipalities it affects is just watered down triage. Let it burn… let it burn.

    • Mister Guy permalink
      May 4, 2012 8:26 pm

      Having literally the capital city of the state of RI go into bankruptcy is far from “the only clear solution”. The negative impact on both the credit ratings of the state & many, many local municipalities in RI almost can’t be over-estimated in that event.

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  1. COLA wars: Hassett and Igliozzi take on Taveras « On Politics

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