Reason #1 That Pension Reform Should not Pass – It’s More Like a 47% Rather Than A 95% Solution
On Thursday, both the House and Senate Finance Committees voted out the pension reform bill. Check out Andrew’s post for an enlightening if not encouraging round-up/review.
Thursday is also Valley Breeze day. This week’s edition contain a letter from Rep. Michael Chippendale and Sen. Nicholas Kettle explaining why they support the bill.
No piece of legislation is “perfect” and “perfection” is in the eye of the beholder. Do I think this bill is “perfect”? No. Do I think it will take a huge step toward solving our fiscal nightmare? Yes. …
There are those who want this proposed legislation to be defeated because it is a 95 percent solution rather than a 100 percent solution.
I’d like to sincerely apologize for appearing to pick on these two fine legislators. They are undoubtedly only voicing the logic of many who support the bill.
Unfortunately, the math doesn’t back such a conclusion. (And let’s not forget that “the solution to our pension issue is rooted in math, rather than politics “.)
The unfunded pension liability of the state system alone is $7.3 billion.
The bill as originally submitted takes care of $3.4 billion, or 47%, of this shortfall. With the revisions made by the FinComms – h/t Ted Nesi for the term – that amount drops to 44%.
So this “solution” addresses less than 50% of a pension shortfall that is, if not the worst in the country, heartily competing for that dubious distinction. (Like second worst would make the problem any smaller. Sheesh. Way to trivialize a dire situation, PolitiFarce.)
The Pew Center on the States is undoubtedly correct, as far as it goes, when they observe that
The proposed plan would be unprecedented, both in terms of the employees it would affect and the scope and scale of changes to their benefits
But the size of the liability is also unprecedented, using “unprecedented” now as a euphemism for really, really bad. As we can see from the math, the magnitude of the solution matches neither the depth of the problem nor its billing as “comprehensive pension reform“.
Accordingly, Justin is correct that, regrettably,
This bill will not solve the pension problem
Well, given the “pure gah-bidge” the electorate has continuously sent to Smith Hill since 1934 one could argue that 44 percent is more than we deserve.
These reforms accomplish more than the last 3 “reforms” Carcieri was able to squeeze out of the GA combined, so they can’t be voted down.
The unions and the cronies are on notice that MORE reforms to the state system will be needed as the fictitious rate of return is slowly exposed. Then we have the needed cuts to the so called “disabled”.
Next we have the munis, who if they are not granted relief will begin a slow march to Bankruptcy Court within the next 2-3 years.
Like the old Fram commercials said-“You can pay me now or……..pay me later”
If you aren’t a cop, fireman, or teacher, and you have been thinking about leaving Rhode Island before the taxes and unemployment really hit the fan, NOW would be a good time.
Last year would also have been a good time.
Or the year before.
Leave RI and then obsessively write home?