ARLENE VIOLET – Pension liabilities will swamp Rhode Island

ARLENE VIOLET – Pension liabilities will swamp Rhode Island

A recent report issued by an advisory panel to General Treasurer Seth Magaziner should concern every Rhode Island taxpayer. This study concluded that almost two-thirds of locally run pensions are in “critical status,” i.e. plans that have less than 60 percent of what they need to cover their pension liabilities. (The security ratio is supposed to be a 4-5 proposition with $4 in for every $5 to be paid out over the long term.) At first blush a taxpayer in a place like Barrington might not think it concerns him. It does. The piper will have to be paid by everyone, so widespread is the problem.

Anyone who is a new employee in these jurisdictions should wise-up. Without reform it is highly unlikely that the “promise” of the gold at the end of their rainbow will be there for them. Particularly worrisome is the promise of workers’ future pensions in Providence which is only about 26 percent funded. Further, the pension shortfall is actually greater than the report says. Providence’s deficit is predicated on an 8 percent investment return and payroll growth assumptions which are myths. By using a high return, the Capital City is exaggerating its performance and hiding millions of additional dollars of accrued liabilities.
When one folds into the dismal funding of accrued liabilities in the pensions in Central Falls and fire (26.5 percent), Coventry police (20.2 percent), West Warwick Town plan (23.3 percent), Cranston police and fire (21.9 percent), and Warwick police and fire (24.0 percent) and the other woeful underfunded pensions, a catastrophe is around the corner.

Taxpayers have to get with the program and realize that the pension liabilities are cannibalizing services in their cities/towns. Providence pays 21.8 percent and Johnston, 21.26 percent of its tax levies for pension obligations leaving little discretionary funds for present needs.
So, what has been the response of the legislators and the governor to this bad news? More nonsense. Just like the politicians as then Providence Mayor Buddy Cianci who mortgaged the future of the city in exchange for public union votes, they, too, are playing the same game. They fully expect to continue the problem for votes until they get out of office and the collapse happens on somebody else’s watch.

There can be no other conclusion other than they are guilty of dereliction of duty. The legislature is hell-bent on passing legislation that boosts firefighters’ pensions into the stratosphere. The governor’s veto pen is stuck in her pocket since she is signaling her support of this legislation along with the bill that continues existing contracts in municipalities despite protests of mayors and town administrators.

Beneath the surface of these burgeoning pension liabilities is another time bomb, i.e. the cost of health care obligations in the cities and towns. Together these liabilities will turn Rhode Island into a third world country. Property taxes will skyrocket.

The ultimate irony here is the collaboration of the very unions that purport to represent all of its members. They are not doing so. To keep their elected positions of power they go for short-term fixes for their members while mortgaging the future of its younger workforce. No person of good will and fundamental math skills can possibly conclude otherwise. The “brotherhood” of union workers is R.I.P. as is the ultimate commonwealth of Rhode Island.

Violet is an attorney and former state attorney general.

Comments

"Just like the politicians as then Providence Mayor Buddy Cianci who mortgaged the future of the city in exchange for public union votes, they, too, are playing the same game. They fully expect to continue the problem for votes until they get out of office and the collapse happens on somebody else’s watch. "

Sounds like what David Cicilline did as Mayor of Providence too.

Everyone needs to understand that after a point of no return, this will cause the RI tax base to erode and that will be all she wrote. Next stop, Central Falls.

People saw this coming way back into the 70's. People were screaming about this for a long time & there was no political courage to do anything until Governor Raimondo was elected Treasurer. She only dealt with the states pensions & it's clear the reforms have only postponed the states pensions problems. The state will be completely unable to help municipalities that go bankrupt. If I was a vendor doing business with RI cities I'd be changing my terms to cash on delivery.

The representatives concerns are the special interest groups, individuals who possess an abundance of zeal for what they want, unlike the majority of the electorate which is apathetic. Unfortunately, they are in an ongoing apathetic state of mind, thinkingly erroneously, that having electing their man or woman they have done their civic duty. They have. But, to what caliber?

One would be foolish to think that zeal alone provides these groups the convincing argument they give legislators that they are doing the right thing. Apathy on the electorates part is certainly contributory. Much so.

In all fairness, painting all legislators alike is wrong. There are good ones serving in the house but, for them to remain good legislators, to make good decisions that will actually look after the electorates well being they need backing! They need to hear from you! We, who elected them have to be, as we say here in Woonsocket, “side by each”.

This could also be reason for the electorate to again ponder term limits. I don’t say that freely because former Senator Marc Cote gave me reason not to advocate for such limiting legislation. But, Marc was an exception. A man from a different generation that held personal values that are obviously on the decline. The Senator elect as example exemplifies and quantifies the premise.

No new revelations here. Just a reminder that it starts and ends with us!

AL

Well, who would have thought that this would have happened i Warwick? I'll tell you. A handful of residents screamed form the treetops about this for many years, but were vilified by the administration of Scott Avedisian. Now that Warwick is teetering on the brink of receivership, the new administration puts forth a budget that is laughable and impossible to maintain. There is no question that Warwick is going under and this new mayor was watching it for almost 20 yeas and did nothing to stop it. Now all of a sudden he claims it was a surprise to him. Maybe he should have read the fine print as the residents that warned him did. Incompetence at its greatest level.