May 16, 2011
Still Wary of Consolidation, Even of Pensions
RI Senate Minority Leader Dennis Algiere (R, Westerly) reminds me that I'm wary of consolidation, even when it's meant to resolve the state's pension crisis. The voices of National Education Association Rhode Island Executive Director Bob Walsh calling for reamortization of the pension system and union consultant Tom Sgouros urging Rhode Island to treat pensions as an annual expense rather than a looming debt keep hovering around suggestions such as Algiere's first point on a list of pension suggestions:
Create one whole-state system that provides state, city, and town workers with comparable benefits.
To the extent that municipal pension programs are struggling, it's because they're more apt to be caught between the unions' demands and the taxpayers' willingness to pay. Consequently, they've been apt to make promises to the former and shirk their responsibility to help the latter understand the real cost (mainly by making them pay it). If final responsibility for public pensions in the state were flipped from the cities and towns to the State House, which side of that coin do you think would be more likely be found facing up?
Some of Algiere's other suggestions, it seems to me, answer the problem without consolidation (perhaps better without it):
* No municipal contract or budget can be accepted if it increases that municipality's unfunded liability.* A municipality must fund 100 percent of its required contribution.
Don't take the heat off of municipalities; make them face it. Don't move the pension system farther away from the people who must fund it; stop disguising the cost.
Why not just take everything off the negotiating table at the local level except wages and place everything else in a single, state controlled, simplified system.
Three things should happen. First, the state will require full funding from the locals for health care, pensions, and OPEB obligations, two, the benefits can be simplified and possibly become less costly to administer (especially if you extend it to health care) and three, the ability of ignorant politicians who only know how to pander will be blocked and maybe responsible behavior can win the day.
I know, your argument that the state is controlled by the union leadership has validity, but I truly believe that it is much less dangerous than the 39 local bodies doing separate damage to our state.
You place way to much faith in local governance.
Of course someone at the state level thinks the state should have more control. That's more control, theoretically, for him. Granted, he is the minority leader in the Senate, where the Republican party only has more members than Martians.
If the municipalities want the state to keep their mitts off them with things like unfunded mandates, then the municipalities should also want to keep local control of all their finances and keep them under control. No, we don't always elect the best and smartest people at the local levels, but we haven't really been doing a great job at the state or even the federal level lately either.
Let the towns sink or swim on their own.
Posted by: Patrick at May 16, 2011 10:19 AMJohn,
Right now, RI's greatest problem is that the pain has been too effectively hidden and the blame too dispersed, such that it never sparks a revolution but consistently drives out productive residents. It may already have happened that too few potential reformers remain to overcome the power of vested interests.
Making the towns fully fund their pensions while leaving them control over the benefit leaves the most efficient route for residents to change things as they need to be changed.
Posted by: Justin Katz at May 16, 2011 12:22 PMI think the horse is gone, closing the barn door won't do it. The state needs to take possession of the barn.
If local cities and towns are forced to fully pay their pension and OPEB obligation based on their required reporting, Cranston, Warwick, Providence, Pawtucket, Central Falls, Woonsocket, and maybe even Coventry will immediately fall into receivership.
The benefit plans must be changed in a way to affect everyone, even retirees. The locals can never accomplish that.
Posted by: John at May 16, 2011 12:30 PMSorry, let's not forget West Warwick and East Providence. EP is looking at an $11 million deficit too!!!
Posted by: john at May 16, 2011 12:33 PM"* A municipality must fund 100 percent of its required contribution."
How? With what? Is there even one municipality in Rhode Island who can fund the new (HIGHER) contribution specified last week by the state Retirement Board? Conversely, we know of at least nine cities and towns - those listed by John - who definitely cannot meet that contribution.
"A municipality must fund 100 percent of its required contribution."
Whether spoken by the senator or anyone else, these words are about thirty years too late and, accordingly, are completely hollow in view of our budgeting practices for the last three-four decades.
All the "talk" is meaningless. Get ready for 10% sales and income taxes. California here we come!
Posted by: Tommy Cranston at May 16, 2011 3:32 PM