And Just When You Thought Things Couldn’t Get Any Dumber
The Woonsocket Legislative Brain Trust (Jon Brien, Robert Phillips, Lisa-Susan Menard-Baldelli-Hunt) has submitted this wonderful piece of legislation to the Rhode Island General Assembly, apparently as an alternative to the supplemental tax proposed by the Woonsocket City Council…
45-21-67. Application of pension funds to reduce tax levy. – Any city or town, or any municipal agency which controls, or has control of, through a selected financial institution acting as custodian, any municipal pension fund may, in its discretion and notwithstanding the provisions of any general law or municipal charter to the contrary, apply the pension funds or a portion thereof, or direct the custodian to apply the pension funds or a portion thereof, to reduce the overall tax levy of the municipality.That’s the whole bill. It is not an authorization for emergency borrowing to cover a short-term cash flow problem, as was discussed by the City Council on Monday. It authorizes the “application” of money from a pension fund, to provide a one-time property tax fix, with future consequences (probably including lawsuits) not really well-specified.
What’s doubly amazing about this bill is that it comes from a group of Representatives who have been demanding a state-appointed budget commission or receiver for Woonsocket. But does anyone think that state appointed officials, once in charge of a city, are going to say “I know, let’s take money from the pension fund, and use it to lower taxes this year”?
There is a maxim of intelligence analysis that says you should never assume malice when incompetence provides an explanation. Watching the Rhode Island legislature makes one wonder “why choose?” — and folks inclined to view the RI House’s refusal to support a supplemental tax for Woonsocket as an act of fiscal conservatism (you’re wrong) need to think long and hard about the kind of idiocy they’re willing to enable, by supporting the General Assembly’s imposition of its kick-the-can-down-the-road ineptness upon municipal governments willing to do something a little different and a little smarter.
I never bothered to read this bill, thinking the concept as described by its authors was ludicrous. Now that I see it, I know that it is madness of the worst kind!
These three complain that we have no plan? Then they submit this excrement and call it a solution? My God! Have they no shame?
“’But I don’t want to go among mad people,’ Alice remarked.
‘Oh, you can’t help that,’ said the Cat. ‘We’re all mad here. I’m mad. You’re mad.’
‘How do you know I’m mad?’ said Alice.
‘You must be,” said the Cat. ‘or you wouldn’t have come here.’”
Ok, these are probably stupid questions, but:
1. Isn’t Woonsocket in the STATE retirement system? So would this bill even have any application since they aren’t in control of the funds?
2. Anybody check with the IRS? You can’t just take money out of a qualified plan without potentially disqualifying the plan and risking all kinds of penalties (well, unless you’re the feds and you’re raiding the Social Security ‘Trust’ fund).
“through the looking glass”
Or, does it not say what it seems to?
Actually, Woonsocket already does exactly what this bill calls for by not fully funding their ARC! And every other community not fully funding their ARC does the same thing.
Putting the money into the pension fund so you can pull it out later is only slightly different than not making the ARC payment to begin with.
Amazing!
Are the Briens related? It’s pretty incredible that a retired cop would support this bill. I can’t imagine his union brethren can be too happy with him right now especially if the rep is a relation. You can’t fix stupid.
Max –
Rep. Jon Brien is not a retired cop…that was former Rep. Todd Brien. Jon defeated Todd in a primary, and they speculated at the time that they might have been distantly related.
Rep. Jon Brien’s father is former Rep., now Woon City Councillor Al Brien, who, by the way, won his seat by defeating Jon’s wife, former Rep. and former City Councillor Stella Brien!
Any more questions?
Just another shining example of the ineptness that has consistently screwed Rhode Islanders, union and non-union alike for decades. These people are amazingly incapable of holding their seats. The incompetence is staggering.
Good bill. The quicker they get to chapter 9 the better.
Oh and John Ward is a tax-loving in the pockets of the union capital A A-hole.
Believe it.
It is true that John Ward is an anti-taxpayer zealot and slobbering Union panderer.
When this issue came up in the recent past, the only concern he raised was whether or not it was legal. He never equated it to short-funding the ARC …until someone else explained that to him and the rest of the boneheads in Woonsocket …see Roger Bouchard’s column in Thursday’s Woonsocket Call.
John Ward’s only proposed solution is higher taxes and more State Aid (taxes). He continues to roll over (or bend over) on every contract he puts his hands on and happily sends the bill to the taxpayers. Time to replace him with a Receiver.
I know I’m getting it done right when I.Ican have Tommy call me a union ass kisser and have had the pleasure of having Frank Ciccone demand that I be removed, from negotiations. You obviously don’t know me Tommy. Let’s get together for a coffee and you can learn more about me.
” the General Assembly’s imposition of its kick-the-can-down-the-road ineptness upon municipal governments”
Yeah, postponing an expense is definitely not the same as obviating one.
By the way, didn’t we see a foreshadowing of this bill during Monday’s City Council meeting? Andrew picked this up in his coverage that evening:
“Councilman Brien (not Jon or Todd) wants to take money from the city pension fund, and use it to close the budget deficit. City official is trying to explain, as nicely as possible, no one in their right mind will let the City do that.”
http://www.anchorrising.com/barnacles/014367.html
(Love the quote from Alice in Wonderland.)
“45-21-67. Application of pension funds to reduce tax levy. – Any city or town, or any municipal agency which controls, or has control of, through a selected financial institution acting as custodian, any municipal pension fund may, in its discretion and notwithstanding the provisions of any general law or municipal charter to the contrary, apply the pension funds or a portion thereof, or direct the custodian to apply the pension funds or a portion thereof, to reduce the overall tax levy of the municipality.”
Since when did they need a law to steal from the pension funds?
Since we are through he looking glass already, I will state for the record the John Ward is not generally, or even ever, considered to be on the union side. That said, he and I are in full agreement that this bill is absolutely ridiculous.
A spoiled child doesn’t realize he has been spoiled and often thinks his parents are “against” him when they deny him the most outrageous of requests.
My bad. I thought Todd Brien was identified as a councilman earlier in another story. Thanks to brassband for the family tree review.
No matter whose idea this is, you still can’t fix stupid.
Bob Walsh,
How would you know whether or not John Ward is a RINO anti-taxpayer zealot who panders to the Union (all of which are accurate descriptions)?
After all, you and your clown assistant, Patwick Crowley, have been too busy with your efforts to bankrupt RI.
I realize that your efforts are almost complete, so you may have had some time to take notice, but given your comment, you clearly have not been paying attention.
Now run along and work on your next big propaganda piece about doing it “for the Children” or about how your flock is underpaid in an economy that is in its 5th year of double-digit unemployment.
Central Falls is in line for 30% to 35% tax levy increases under the receivership plan, when all is said and done. Apparently Tommy Cranston would like to see something similar for Woonsocket, followed by pay-as-you go pensions, after the pension fund has been “borrowed” from (though it’s not clear from the bill that “borrowing” is the right way to describe the application of funds.
Leo,
No more general insulting of other commenters. This subject is not open for discussion, and this is the only warning that will be given.
Michael,
I really see a world of difference between adjusting promises made decades ago, that were based on unrealistic financial assumptions and the belief that future taxpayers could provide unlimited sums of money, versus taking that’s sitting in a pension account, a large chunk of which was contributed by municipal employees. (And that’s beyond the fiscal stupidity of the whole thing, of course).
Also, as a purely legal matter, I find it hard to believe that any attempt to use this law to solve the immediate problem in Woonsocket won’t be enjoined, taking months or even years to resolve.
Andrew – duly noted. No more general insulting. I will be more specific in my “insults” going forward …just kidding.
The Pension “borrowing” scheme was nothing more than a diversion meant to mollify people. It was meant to be: “I killed the Supplemental Tax, but hey, look over here, I am being proactive and introducing legislation that will help the taxpayers.” It is just Garbage and misdirection.
With regard to Receiver, Central Falls – Tommy Cranston is right.
What would Central Falls’ tax levy look like had they not gone into Receivership?
What would the Pensioners be receiving had they not gone into receivership.
The only way to recovery was through receivership. Painful? Yes. But necessary? Abso-f’ing-lutely!
Woonsocket is in need of the same medicine and they will get it. It will just come later than sooner due to a Mayor and Council that are short-sighted and simple-minded.
Andrew, Providence officials took money from the pension fund, including money directly contributed by workers and put it in the general fund, starting with Cianci. The courts upheld the practice stating that as long as the municipality fulfilled its obligation to the retirees it was okay.
“The courts upheld the practice stating that as long as the municipality fulfilled its obligation to the retirees it was okay.”
How’s that working out? I know this has been beaten to death but we can’t blame it all on unsustainable benefits. Some were unsustainable others were just poorly managed. There ARE some pensions that are well funded.
Michael,
If they had not taken cash from the Pension Fund and/or had they properly funded it, the city would not have been able to afford all the other lavish benefits bestowed upon the coddled “heroes” in the FD.
It was a shell game. Unions quietly went along with the “raiding” of the Pension fund so that they could continue receive fat raises, free healthcare, clothing allowances, longevity, extra holidays, etc.
Then, when the money finally runs out, as it has, the Unions whine that the Politicians didn’t properly fund the Pensions and/or mismanaged the funds.
Nonsense. There are only so many resources available. If you want to direct those resources to unsustainable pay and benefits, then sorry, there is nothing left for the Pension fund. It is simple math …it just took a while for our Union-taught masses to catch on.
Maybe Central Falls was so far gone that nothing non-catastrophic could have been done under the constraints of the pre-receivership law, but that’s not true of other places in RI. Providence is making benefit adjustments by ordinance. Yes it’s going to end up in court, but so does any action a receiver takes. East Providence tried making budget adjustments by not continuing the terms of expired contracts, and only ended up with a budget commission after the school committee that tried something different got voted out. Now they’ve got a tax-to-the-max in year 1 budget commission instead.
If the general form of the answer is the East Providence Budget Commission (so far)/Central Falls receivier plan of tax-to-the-max, then adjust service benefits to whatever fits underneath, you don’t need the non-existent magic powers of a “receiver” to achieve it. Receivership has nothing to do with the simple math you refer to above, and references to coddled heroes suggests a higher priority on score-settling than on making fiscal sense.
Michael,
Hmmm. The mention of control “through a selected financial institution in reference to a pension fund in an usual construction in this bill. I wonder if that detail has something to do with the specifics of Woonsocket, in the same way that “self-insuring” can be different from other ways to provide insurance.
However, years of blogging in RI has made me wary of assuming that lots of precision planning goes into legislation that gets submitted.
Andrew,
There was very little planning with respect to the subject bill. It was done in a hurry in an effort by the sponsors to appear to be doing something, anything for the taxpayers.
In their haste to appease appear to be proactive, they dropped the proverbial ball and were left standing like fools with their pants down around their ankles.
Michael,
FFs receiving 6% COLAs and $196k pensions are Coddled. There is no other description, sorry.
And who voted out the School Committee in EP? That was Union all the way.
That is why a Receiver is needed …they don’t have to worry about elections or pandering to coddled Union members who believe they are Entitled to retire at age 42, while the taxpayers work into their 70s to pay for it all.
In Central Falls, as compared to EP, the Receiver imposed “cuts” on everyone …taxpayers, retirees and employees.
Anything other than Receiver at this point in Woonsocket is nothing more than delaying the inevitable …all while wasting time and money.
The budget commission EP providence does not have to worry about elections. Their plan, so far, is raise taxes as high as the property tax cap will allow, and eliminate the homestead exemption (easy to do when you’re not accountable to voters). All you’d likely get with a receiver right now is a bigger initial tax increase before you start figuring out what you can fit under the stautory tax limits. And taxes don’t cost any less, just because they’re assessed by someone with the title of “receiver”.
Not passing the supplemental in Woonsocket, that most people think is going to be passed anyway, is the only delaying of the inevitable going on right now.
Andrew,
You wrote: “All you’d likely get with a receiver right now is a bigger initial tax increase before you start figuring out what you can fit under the stautory tax limits.”
OK, I can work with that.
It has been reported that Woonsocket’s tax levy this year is $56 million. The statutory tax limit for the next year, which starts in 36 days, is 4% ($2.24 million).
It has also been reported that they have a cumulative school budget deficit of $10 million and they just approved a $69.9 million school budget for FY 2013, which is a $10 million increase over the current budget.
Therefore, before any other changes in their budget (such as increases for the FFs or PD), they need $20 million, which is 9x the statutory limit ($20 / $2.24).
State-aid increases will handle some of it, but not nearly enough.
As the old saying goes, its just math, Andrew.
Unfortunately, they have a situation that is similar to the RI State Pension problem. For years we had the likes of Bob Walsh & Co. telling people that things were fine, just use crazy assumptions and everything will work out. Their mantra was “Please, join me in a nice game of kick the can down the road, but whatever you do, don’t look behind the curtain”.
Then came Gina. Gina, unlike many, knew how to do simple math …and the rest is history.
Take a lesson, Andrew, and don’t be fooled by the fools in Woonsocket that are fooling themselves.
Only a receiver who can deal with the costs in conjunction with tax increases is going to repair that city.
“For years we had the likes of Bob Walsh & Co. telling people that things were fine, just use crazy assumptions and everything will work out. Their mantra was “Please, join me in a nice game of kick the can down the road, but whatever you do, don’t look behind the curtain”.
Leo is a VERY welcome breath of fresh air on this blog.
8.25% “assumptions” when we have real life stock market returns of ZERO over the last 13 years.
The Central Falls receivership plan is using the same rate of return assumptions that everyone else is using to arrive at its 30%-to-35% (at least) tax-increase for the city. If the assumptions are as unrealistic as some people think they are, the current plan of the CF receiver to hike taxes by 4% a year for the next five years (are people from Woonsocket who think that “receivership” is an automatic cost-cutting measure paying attention here?) could go on longer.
Of course, one thing the receivership plan seems to have working for it is a group of people who are willing to support any tax-increase, as long as it comes from an official not accountable to the public.