Prov GOP to Elorza After Backing Off Monetizing Water Supply: Get Out of Pension Business
GoLocalProv Political Team
Prov GOP to Elorza After Backing Off Monetizing Water Supply: Get Out of Pension Business
Co-Chairs David Talan and William Ricci released the following statement -- after Elorza said he has no plan at this time to address the $2 billion unfunded liabilities for pensions and other post-employment benetfits (OPEB).
“If we do nothing about the unfunded pension & health plans, the city will definitely go bankrupt in the near future, and this would be a very bad thing for Providence residents,” said the Providence GOP. “The Mayor has demanded that opponents of his water plan should offer an alternative. So the GOP leaders offer the following ideas to cut costs, instead of raising taxes and fees.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThree GOP Ideas
Talan and Ricci released the following statement.
Some retirees are making so much money, that they would have to take a pay cut, if they came out of retirement to go back to their old job. This is due to excessive cost-of-living adjustments (greater than the rate of inflation) given to employees during the Cianci administration. No retiree should collect more money than current workers doing their old job, and their pensions should be reduced accordingly.
No retiree should be able to collect a pension before the age of 60. Now, some employees retire in their 40’s, collect a pension immediately, and go to work in another job. When Governor Raimondo reformed the state employees retirement system, she raised the minimum age for all current and future employees to collect a retirement pension. Providence needs to do the same.
The city should get out of the pension business entirely. New employees should receive an Individual Retirement Account (IRA), which they own themselves. The city of Cranston did something similar a few years ago. Under Mayor Allan Fung, 401(k) retirement plans began in 2010 for the Teamsters Union, and in 2015 for the Laborers Union. We should follow Cranston’s example.
The Mayor has previously rejected these suggestions. He has said any changes to the union contracts are off the table, due to a consent decree signed by his predecessor. And he has said that if the city goes bankrupt, an overseer might sell the water system anyway.
The Providence Republican leaders have consulted with the top R.I. expert on municipal bankruptcies (Judge Robert Flanders, who managed the bankruptcy in Central Falls). They learned the following. If the city were to go bankrupt, the absolute last thing that an overseer would do is to sell the city’s assets. The first thing he would do is to force the unions to renegotiate contracts. The threat of losing everything would be enough to force them to negotiate seriously. When Central Falls went bankrupt, retirees lost up to 60 percent of their pensions. If Providence were to go bankrupt, retirees would probably lose everything. (Changes in law, since the Central Falls bankruptcy, give first preference to bond holders, and retirees can only get what is left, if anything.). This serious threat would be enough to bring them to the table.
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