When Central Falls declared bankruptcy last year, Pawtucket Mayor Donald R. Grebien knew those expecting the fiscal illness to spread to other communities in Rhode Island would be watching his then-ailing city for symptoms.
So far, Pawtucket has avoided any new setbacks or complications, but Grebien and other Rhode Island mayors say the financial health of the state’s cities remains precarious and they need the kind of dramatic legislative help in 2012 that lawmakers delivered to the state pension system last year.
“Pawtucket was fortunate enough to slip by: we went from negative to stable,” Grebien said, referring to his city’s bond rating and outlook. “But we are far from out of the hole.”
With a sweeping and controversial overhaul of the state retirement system now out of the way, the plight of Rhode Island’s cash-strapped cities and towns has taken an unobstructed place in the 2012 political spotlight.
In the past few months, East Providence has been placed under the oversight of a state budget commission, and Woonsocket has been put under a bond-rating watch that could end with a downgrade.
Having failed to attach relief for struggling municipal retirement plans to the 2011 state pension overhaul, Gov. Lincoln D. Chafee has vowed to file a new bill in the early days of the new legislative season to solve what he called a “crisis.”
A former Warwick mayor, Chafee has promised not to stop at pensions, but to work to find other measures to help communities, such as expediting state school aid and reining in some of the unfunded state mandates that frustrate local leaders.
Yet as long and difficult a process as scaling back the benefits for public workers in the state plan appeared last January, fixing the structural problems that threaten local governments, especially their poorly funded local pension plans, may be more difficult.
The legal, practical and political challenges that prompted leaders in the General Assembly and General Treasurer Gina M. Raimondo to pass on municipal pension-plan reform in the state overhaul bill remain.
House Speaker Gordon D. Fox and Senate President M. Teresa Paiva Weed have both voiced reservations about attempting to change independent municipal pensions in the same manner as the state system.
One of the most difficult aspects of changing municipal pension systems is that, unlike the state retirement system, the problems facing each community are different, with some being significant and others hardly affected at all.
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