1/19/12

Municipal Pension Commission a Good Idea

I don’t always agree with Governor Chaffee but on the matter of forming a commission to study the municipal pension situation, I think he’s doing the right thing. The commission has been tasked to study the various independent pension plans out there across the state, many of which are grossly underfunded, and come up with recommendations for legislation by the General Assembly this session. The commission includes labor leaders and municipal leaders so it aims to be inclusive. (So did Gina Raimondo’s study group, which also included labor representatives, though they complained later that the set of recommendations passed on to the legislature was a whitewash as far as they were concerned.)

The most immediate issue for the commission is to throw a lifeline to struggling cities and towns in the form of enabling legislation that will allow them to halt COLA payments to retirees. Otherwise, some mayors have asserted, they could go broke like Central Falls – or need advance state education aid payments like East Providence to cover the bills. Beyond COLA relief the commission will study ways in which municipalities can bring these plans into line with the guidelines that cover plans under the state system. In passing pension reform last fall the legislature did sketch out a reform mechanism for cities and towns, and we can expect the commission to further that mechanism.

Having enabling legislation in place to halt now unaffordable COLA payments to retirees will help stop the hemorrhaging that’s taking place in a number of RI cities and towns. Lawsuits will inevitably follow and all of this will end up in court, but, in the meantime, cities and towns will be in a better position to continue making payroll and pay retirement benefits, and not have to go hat in hand to the state for bailout payments. Plus, legislative assistance to troubled municipalities will help stabilize their sinking credit ratings.

2 comments:

  1. Wouldn't it be wiser for the State and towns to go with a 401K plan like private companies do? Let people save for thier own retirment instead of taking expected benifits away from those that have planned thier lives on recieving.

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  2. John ,
    I appreciate your interest in Rhode Island. You are a big reason for my decision to run against Jim Langevin.I ve been following your efforts from the sidelines since 2002 but I can't stand aside any longer. I am a very experienced business professional who believes both Rhode Island and the United States are in a very precarious economic precision. The politics of Rhode Island are no longer cute and the United States Congress is filled with lawyers and politicians who have no clue about how the economy really works. Mr Langevin has stood aside for 12 years as the economy has careened from one bubble to the next. Now we are confronted with other bubbles. One is the bubble of government compensation which is inextricably tied to public unions.
    My aim is to use my financial background and history of success to focus on the next 4 to 6 years in Congress.I am not looking to make a career out of this .I am on a mission to make significant change.

    Michael G Riley
    Narragansett
    http://rileycongress.com/about-michael/

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