Undoing the Central Falls Settlement with Some Last Minute Legislation?

Can't talk about the bill, it's still in committee...
Can't talk about the bill, it's still in committee...
Can't talk about the bill, it's still in committee...
Why do you want to talk about that bill? Everything important about it was decided in committee.

Justin Katz of the Ocean State Current (and Anchor Rising too) has a report on what looks to be the first salvo in the hurry-up final phase of the legislative session. Senator Elizabeth Crowley of Central Falls has submitted a bill, apparently at the request of the RI Department of Revenue, that would allow any municipality under state oversight and running a local pension system to move into the MERS system. In part, this bill is a follow through on a promise that was made as part of the Central Falls bankruptcy settlement, where the Governor agreed to help Central Falls transition to MERS.

But there may be more to the promise -- or, as pols have become fond of saying these days, perhaps the promise has evolved. In addition to facilitating a move to MERS, the Governor's office has also been advocating for a $2 million to $2.6 million so-called "transition fund", designed to temporarily soften the effects (for a period of five years) of the bankruptcy agreement which reduces the benefits that will be paid to Central Falls pensioners. As a Projo staff report from the end of April mentioned, the creation of the "transition fund" also serves the purpose of helping to convince some people impacted by pension changes not to pursue a lawsuit.

Meanwhile, Senator Crowley's bill is separate from the transition fund. She told the Current that its intent is to "return [Central Falls] pensions to 75% of the payments that they had been receiving before the receiver and a bankruptcy judge reduced them". Though such a provision is not explicit in the current Senate bill, a reference to a "base retirement allowance" of not less than 75% of the pre-settlement benefit for Central Falls retirees is written into the House version of the bill, introduced by Representative James McLaughlin.

If the "transition funds" are approved, and if a floor on benefit adjustments is set at 75% of pre-settlement value, either directly in law or through an amendment to the settlement agreement, and taking effect immediately after the transition period has ended, then it is very possible that the much publicized 55% benefit cut in Central Falls will never occur.

Is this all a good idea? As far as the transition funds are concerned, the question (though not the answer) is straightforward -- should there be a state bailout of the Central Falls pension system, so that the cuts needed to restore solvency aren't quite as deep, at least in the early years. As regards the longer term issues involved in the Crowley/McLaughlin bills, some basic information is needed by both legislators and the public, which the authors and sponsors of the bills should provide with all due speed:

1. Is this proposal revenue neutral, with respect to the existing Central Falls settlement agreement, and...
2. ...if not, where's the extra money coming from to pay for it: a) higher taxes on Central Falls, b) directly appropriated state subsidies, similar to the "transition funds" and/or c) some kind of Rube Goldberg financing via the working of the state pension system.

With recent events in West Warwick, to name just one community, the transition fund proposal and the Crowley/McLaughlin bills also raise the question of whether other communities would be in line to get the same bailout that Central Falls might.