October 4, 2011
The Pension Performance Is Already Underway
I wanted to go to last night's Publick Occurrences event, but after around 10 hours of motivational speeches and get-rich sales pitches, I just couldn't bring myself to do it. Part of the problem is my suspicion that the game is already set, and like those sales pitches, everything being said right now is just a performance. General Treasurer Gina Raimondo gave Newsmakers a pretty good indication of where leadership is going:
Raimondo signaled a COLA freeze will be a key part of the plan, saying a suspension of the annual increases could reduce the unfunded liability by up to $1 billion, depending on whether the freeze is full or partial and if it continues for "a lengthy time." That would be the most significant change for current retirees. ...The third major plank expected in the Raimondo-Chafee proposal: reamortization, or stretching out the schedule for paying down the unfunded liability, which raises its long-term cost. The treasurer has criticized reamortization in the past as inadequate, but said Friday she can support it if it's tied to other changes. ...
One policy Raimondo doesn’t support: raising the retirement age for state workers who are already eligible to retire, which she said could result in a rush to the exits before the new plan takes effect.
The game is up. (The "second plank" was a hybrid plan moving forward.) We're looking at a $7-9 billion shortfall. $1 billion will come from a little temporary tweaking of COLAs, and the rest will fall to reamortization, which only increases the burden down the road, and there's still a probability that all of the "fairness" and "spreading the pain" talk indicates additional tax increases, beyond what's already been pushed down to towns and cities by lowering the expected rate of return on pension investments.
Plainly put, the people running the show in Rhode Island aren't willing to avoid yet another bad long-term repair to the problems they've created by making the changes that have to be made for pensioners across the board. So, they're pretending that a temporarily suspended annual adjustment (in a continuously bad economy) is the end of the world.
That's why legislators are making such a big deal about "doing the right thing" and voting to reduce the pensions that so many of them and their families are receiving or will receive: Because it's not nearly enough of a reduction in total benefits, and in a sense, they're negotiating the public down.
Am I right in thinking our part-time legislature is eligible for a public pension? If so, I'm curious if any of you have seen any numbers that would tell us what the savings would be if this were simply eliminated. Of course, if it's not correct, feel free to tell me that too.
Posted by: Ron at October 4, 2011 8:00 AMThat's the grand solution? Public employees give up lousy COLAs for a couple of years and taxpayers bail out the rest for the rest of their lives? So all the talk was just talk and the can gets kicked down the road another 20 years. All the current politicians and union leaders will be retired by then, of course.
It's difficult to argue that anyone who stays in RI at this point and continues to fund the mob running the state hasn't consented to the corruption and shenanigans. It's not like there aren't 49 other states and a bunch of territories from which to choose. Enjoy the tax hikes, folks - the cops and firemen buying boats in Ft Lauderdale at age 55 thank you.
Posted by: Dan at October 4, 2011 9:17 AM@Ron
The General Assembly eliminated pensions for newly elected legislators in 1994. There are however several legislators that have been elected that receive pensions from prior public service.
I am having trouble believing the fix will be as lame as you are predicting, Justin. There is way too much riding on this.
If you are correct, then Rhode Island's future (not the blog) is quite dim indeed.
Posted by: Ken Block at October 4, 2011 11:10 AM"$1 billion will come from a little temporary tweaking of COLAs, and the rest will fall to reamortization, which only increases the burden down the road, and there's still a probability that all of the "fairness" and "spreading the pain" talk indicates additional tax increases, beyond what's already been pushed down to towns and cities by lowering the expected rate of return on pension investment"
Justin
Pessimist that I am, that can NOT be "The Plan"-the numbers just don't add up.
Any idea when Saint Gina is unveiling "The Plan". It is "early October" on my calendar.
Ken,
They're also talking about a hybrid plan, but that would only stop the liability from growing, no?
I'll be happy to be wrong, but with Bob Walsh running around all summer declaring that reamortization could do it alone, I find it very easy to believe that the "compromise" will indeed be this lame (especially if the governor's on board).
We'll know what the initial plan is within a week and a half, supposedly.
Posted by: Justin Katz at October 4, 2011 12:15 PMKen,
I'm not sure what your tolerance is for BS, but mine is zero. When you hear these union dopes like Paul Valetta claim that it is the politicians fault, I just laugh - as in who the hell do you think you are kidding. A simple perusal of the campaign finance reports for the "politicians" who are at fault, will reveal massive amount amounts of money from the firefighters unions, teachers unions, and on and on. The union support for the politicians responsible is the dirty little lie that the unions are hoping that we don't figure out.
This was all part of the little charade that the unions played. Knowing full well that proper funding of pensions annually would leave little left for pay hikes and benefits on a current basis, the union dopes said nothing - all, while knowing full well they were doing. The figured that when it was discovered, the public would have no choice but to pay up.
This is why the union goons are so beside themselves with the notion that benefits might actually be cut. That was not figured into their deceptive little plan.
It's quite fitting that people end up getting what they deserve. If the good people working in public jobs don't see fit to replace the imbeciles running their unions, they get what they deserve.
You don't understand, Mike... sure the indignant firefighters showered Cicillini and other highly questionable characters in the Democratic Party with campaign contributions. Sure they knew he was a crook. But at the time they thought he was *their* crook.
Posted by: Dan at October 4, 2011 11:30 PMSmall point but this just registered:
but after around 10 hours of motivational speeches and get-rich sales pitches,
Ten hours??? At some point, don't attendees stop being motivated and start becoming simply maxed out?
Posted by: Monique at October 5, 2011 8:15 AM[[[[ Ken,
I'm not sure what your tolerance is for BS, but mine is zero. ]]]]
So is mine! That's why I have to comment on your comment.
[[[[ Knowing full well that proper funding of pensions annually would leave little left for pay hikes and benefits on a current basis, the union dopes said nothing - all, while knowing full well they were doing. ]]]]
In Prov we (FF's union) took the City to court in an attempt to force them to make their required pension contributions. The judge ruled that as long as the system was not failing to send pension checks they were not required to make their contributions to the system regularly. The judge warned the City, however, not to come back to the court stating that they were unable to meet their required pension payments in the future.
That's the truth - no BS.
Posted by: Tom KIenney at October 5, 2011 9:00 AMHey Tom,
Why don't you call your buddy Paul Valetta and ask him about his union's bigtime support for Mike Traficante when he was mayor. That's when the shenanignas really took off in Cranston. If I'm not mistaken, Paul Reed was a Cranston firefighter - that's Jack's brother - and was in a position to know this stuff too. In fact, if I remember correctly, Frank Montanaro was a Cranston firefighterand went on to become head of the RI Association of Firefighters and also the head of the AFL-CIO in RI. He knew what was going on. When did he speak up??
These are people who knew very well what was going on. And what did they do about it??? NOTHING!!
I just have one question for you Tom - why did your union continue to send campaign contributions to those who would not fund your pension?
I just have one question for you Tom - why did your union continue to send campaign contributions to those who would not fund your pension?
Posted by Mike Cappelli at October 5, 2011 10:41 AM
Ha Ha. Good one-no comeback for that one.
The union/pol iron triangle worked for half a century but like the Soviet collapse, its imminent downfall proves Margaret Thatcher's maxim:
"Socialism only works until you run out of money to steal"