The number is vertigo-inducing: $9.4 billion. That is the gap between what state and municipal employees have been promised in pension benefits and the amount of assets in place to cover that liability.
Last week PBN praised General Treasurer Gina M. Raimondo for making the case – forcefully – that the No. 1 issue facing the state in fiscal terms was the pension crisis. And when she spoke at the Greater Providence Chamber of Commerce’s annual economic-outlook lunch, the unfunded liability was “only” $6.8 billion.
With new, more realistic assumptions about rate of return in place, the number grew to $9.4 billion. And so has the need for action.
The treasurer has said that she would not be ready to recommend changes until later in the year, after the budget for fiscal 2012 is in place, due to the size and complexity of the issue. That is simply just not good enough.
Yes, the issues are difficult, and the numbers are large, but the problem only gets larger by the day. At a meeting last week, the State Retirement Board voted to increase the amount that taxpayers pay into public employee pension funds by $266 million next year. So, in addition to a projected $331 million budget deficit, the state must figure out a way to cover that cost.
Gov. Lincoln D. Chafee has mostly offered platitudes about the need for shared sacrifice. His plan for fiscal 2012 does not attack the problem in any meaningful way.
Pension reform – including changed benefits not just for future public sector hires but for retirees – must be enacted for fiscal 2012. The state’s financial future depends on it. •