PROVIDENCE – Mayor Brett Smiley still wants Providence to join the state pension system as one way to ease the city’s pension crisis. But that isn’t among the legislative priorities his office is actively pursuing, at least right now.
Smiley on Feb. 16 unveiled the city’s 2023 legislative priorities. Legislation related to joining the Employees’ Retirement System of Rhode Island was not one of them.
That doesn’t mean it’s not a priority, according to city staff, but there isn’t a bill being actively drafted.
During his campaign and in previous interviews with PBN, Smiley touted the benefits of joining the state pension system as one way to address the city’s pension problems, which include a massive unfunded liability and escalating annual payments. Joining the state pension fund would cut out costs for investment advisers, bankers and lawyers, and also let the city access investment products it can’t use right now because its system is so poorly funded, according to Smiley.
The city’s total pension liability stood at $1.7 billion as of June 30, 2022, with just 23% funded, according to the most recent city audit report.
Meanwhile, the city’s annual payment to its pension system is forecast to reach $120 million by fiscal 2027, which would eat up 21% of the city’s general fund revenue. If nothing is done, the contribution is expected to swell to $230 million by fiscal 2040, according to a January 2022 report.
The city in 2022 received the go-ahead from state lawmakers and voters to borrow half a billion dollars to shore up its pension fund but it has not issued bonds yet because interest rates are too high.
While not named as a 2023 legislative priority, legislation related to the city pension fund – or other items – may still come up as the session progresses, according to city staff.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
Throwing the PVD Pension Plan Monkey on the back of the State is NOT a solution. Bob Flanders has outlined the only feasible way to solve the PVD Pension Plan Problem on several occasions. Unfortunately, none of your elected officials have the courage to take the necessary steps to mitigate this problem.