Lifeline for R.I. cities on the brink?

AFTER MUNICIPALLY run retirement systems were excluded from the sweeping state pension overhaul passed by lawmakers last fall, Gov. Lincoln D. Chafee vowed to come back this year with a new bill to help cities and towns struggling under the cost of their local pension plans. / PBN FILE PHOTO/FRANK MULLIN
AFTER MUNICIPALLY run retirement systems were excluded from the sweeping state pension overhaul passed by lawmakers last fall, Gov. Lincoln D. Chafee vowed to come back this year with a new bill to help cities and towns struggling under the cost of their local pension plans. / PBN FILE PHOTO/FRANK MULLIN

After municipally run retirement systems were excluded from the sweeping state pension overhaul passed by lawmakers last fall, Gov. Lincoln D. Chafee vowed to come back this year with a new bill to help cities and towns struggling under the cost of their local pension plans.
Few at the time, however, knew how far-reaching the package of municipal-empowerment bills proposed by the governor last month would go, and that Chafee would look to change not only local pensions, but the collective-bargaining dynamics between local governments and unions.
A cost-of-living-increase freeze for government workers like the one that dominated the pension debate last fall is included in the package, but may not end up being the biggest flashpoint in the seven bills lawmakers began discussing in Senate hearings last week and will take up in the House next week.
“COLAs are not the most controversial changes in this package,” said Daniel Beardsley, executive director of the Rhode Island League of Cities and Towns, which supports the municipal-aid package. “The measures for highly distressed communities that have to do with binding arbitration and things like school bus monitors have been in the collective radar for years and would be game-changers. Organized labor is opposed to that.”
Provisions in the package would cut worker or retiree-related costs for all communities by lowering the minimum size of disability pensions for municipal workers, barring any locally run pension plans from offering benefits more generous than the state-run Municipal Employee Retirement System and freezing COLAs for any local plan less than 60 percent funded.
For “highly distressed communities” in the bottom 20 percent of per capita income and property values, the measures would go even further and allow suspension of payments to police for getting college degrees, elimination of teacher seniority pay raises, and preventing public-safety unions from operating under expired contacts while going through binding arbitration.
A former mayor of Warwick, Chafee has included other measures in the bill that target the tension in many communities between municipal and school officials by giving chief executives in “highly distressed communities” final authority over education budgets and allowing consolidation of school and city-side administrative functions. Although the majority of communities in the state would not be able to take advantage of the added executive authority granted the distressed cities in the bill, local leaders see the measures as potential precedents that could help them in the future.
“People acknowledge that not every bill is a benefit to every city: highly distressed communities would be empowered to do many things that are not being made available to others,” Beardsley said. “But they are going along with the governor that if distressed cities could get a foot in the door, you could follow up with legislation that allows [other] communities to get the same opportunities.”
As expected, the municipal-aid package has not been popular with union leaders, who have described it as a direct assault on the labor movement and collective bargaining.
Rhode Island Federation of Teachers President Frank Flynn said the distressed-communities bill had turned into a catch-all landing place for old attempts to blur the lines between municipal and school government.
“Districts already allocate the funding and school committees determine how to spend it, so this basically strips the school side of authority and collective bargaining by freezing steps,” Flynn said.
A potential concern for municipal leaders counting on many of the measures in the municipal-relief package is that some of the more divisive provisions could erode support for the remainder of the legislation.
In Pawtucket, which along with Providence, Woonsocket and West Warwick would qualify for both the “critical status” pension-relief provisions and “highly distressed community” measures, the city’s soaring retiree costs and 30 percent unfunded pension liability are now at the top of the list of needs. “What is most important is just to get us to the point where we can stay alive and that [involves] the pension and [retiree benefits] battles,” said Pawtucket Director of Administration Antonio Pires. “I truly believe that there is just a very limited amount of time before this community and others are at the receivership door if something isn’t done.”
In Chafee’s former community of Warwick, which wouldn’t directly benefit from any of the expanded powers afforded to the “highly distressed” areas, Mayor Scott Avedisian pointed to the importance of bills dealing with public-school accounting methods and an exemption from annual education-spending rules for communities paying down school debt.
On a broader level, Avedisian said he appreciated the focus in the bill on easing the burden of state mandates, which was reflected by the fact that many of the provisions allow each community to opt in to them only if needed.
“It is important that [Chafee] is not just pushing these things on a city that has to opt in,” Avedisian said.
Although the perilous condition of Rhode Island’s cities has heightened the need to find ways to help avoid new municipal bankruptcies, it is unclear how much of the support behind the state-pension overhaul will transfer to the municipal bills.
Another big question is whether the numerous interest groups that jumped in to the state pension-reform battle will re-emerge for the municipal-aid debate.
The business-backed EngageRI group spent more than $600,000 last fall, mostly on advertising, to support the state-pension overhaul bill.
But whether Chafee’s bills will get the same support from EngageRI is far from certain.
EngageRI spokeswoman Meaghan Wims declined to say whether the group supports Chafee’s legislation.
In a statement released last week, EngageRI said, “We encourage the cities and towns to take the same approach to pension reform as the state did when implementing [the Rhode Island Retirement Security Act], by doing the number-crunching and the legal work to design a plan for comprehensive and sustainable reform.” •

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