Despite a clear message from the city administration that failure to pass pension reform would be devastating for Woonsocket, Rep. Lisa Baldelli-Hunt (D - District 49, Woonsocket) explained Wednesday night that she could not pass the current bill without significant amendments.
All five members of the General Assembly representing Woonsocket attended the meeting at City Hall, along with members of the City Council, Mayor Leo Fontaine and Finance Director Thomas Bruce.
"I just felt it was prudent for all of us to sit around the table and just formally go through what some of the [pension] issues are, as far as what the proposed increases would do to the local budget," said Fontaine.
Minus reform, Woonsocket faces a $5.9 million contribution to the state-run Municipal Employees Retirement System (MERS) over the next two years, a cost which Bruce explained would translate to "at least a $3 tax increase."
"When you look at the amount Woonsocket would be required to contribute, it's astronomical," said Fontaine. "I don't want to sound so negative about it, but there's really no way that we could make up that difference without tremendous impact to the taxpayers and to the services. I think we would see shutting down City Hall for a couple of days."
Unfunded liabilities of similar proportions face cities and towns across the state, and with the General Assembly poised to vote on a solution proposed by General Treasurer Gina Raimondo and Gov. Lincoln Chafee, Fontaine hoped to bring city representatives on board in supporting what he sees as needed reform.
"When you go back to the Statehouse and carry the message forward, I think that's clearly where we're at right now," he said. The mayor attended a joint House and Senate finance committee hearing to deliver that message personally last week.
Woonsocket officials are also on board with many city and town leaders seeking to add a provision that gives cities the right to suspend Cost of Living Adjustments (COLAS) on independent, locally run pension systems. The proposed reforms would suspend COLAS — an automatic raise for all retirees tied to the rate of inflation — for up to 19 years on the state level, a plan which union representatives have . Though the legislation includes some provisions for municipal retirement systems — the independent plans that pay for employees and retirees not covered by MERS — that the bill does not go far enough to address this additional liability. There are 36 non-MERS plans in 24 communities across the state and officials have said that most are funded less than 60 percent. Woonsocket's plan is currently 58 percent funded.
"On the local side of things, we're in a little bit different of a situation than a lot of other cities to the degree that our systems are closed, and we have the bond proceeds that give us a artificially high percentage of our fund covered," said Fontaine. "But we do have to pay on that debt service."
Woonsocket's system was capped back in 1985, and no new entries will be added to the 258 retirees currently covered by the plan.
"Any increase in pension between now and 2025 when it peaks at $9 million annually — that growth is directly related to COLA," Bruce said. "The difference between future benefits of COLA — compounded COLA as it stands now — versus no COLA is approximately $100 million dollars, over the next 40 years."
The proposed legislation does not give cities and towns the right to suspend the municipal COLAS, but does require municipalities to address the unfunded liabilities by going back to the bargaining table with unions. Woonsocket and other communities throughout the state would have to achieve 80 percent funding or 50 percent improvement over their current funding level within the next 10 years. Though the city is currently on a five-year payment schedule, there are no penalties for late payments. Under the new system, failure to provide a plan would result in the loss of state aid.
"By this proposal, requiring everybody to do a 10-year plan, and tieing that directly to state aid, that's where this puts us in a real bind," Fontaine said. "Without some tools, it's very difficult to get a handle on this and I think that's why the current request is that whatever tools are given to the state in the form of suspension of COLAS and things of that nature, cities and towns would benefit tremendously by having those same abilities."
With the city's position explained, Baldelli-Hunt took the floor, and much of the remaining 2 hour and 20 minute meeting was dominated by her objections to the bill, followed by plees for ultimate approval from nearly all of the present council members.
"I'm not sure exactly what you're requesting from us," said Baldelli-Hunt.
"Make sure this bill passes at the state, because we can't afford the $6 miilion," replied Council President John Ward.
"A handful of municipalities are asking for the remainder of the room to help satisfy our debt," Baldelli-Hunt said. "That's not an easy request. We can try to do that."
"We're not asking the state to help finance Woonsocket's problem," said Ward. "We're asking the state to apply the same rules that the state is applying to itself in order to provide relief from a burden we can hardly handle, and nobody would be funding it. And in terms of the other communities: Providence, Pawtucket, West Warwick, Johnston, Cranston, Coventry, Central Falls ... it's a majority of the population of the state. None of them want us to pay their bill or for them to pay our bill. They just want the ability to work their way out of it."
"I can tell you on the record: I'm not in favor of this legislation," Baldelli-Hunt replied. The representative's strongest objection to the bill is rooted in its treatment of judges that fall under the state system.
"We're passing legislation that would allow judges — who are the highest earners in the state of Rhode Island — to receive COLA increases, but we're taking away the COLAS to individuals that are receiving very small pensions. I can't do that," she said. "In my world, that is not fair."
These, and other inequities, explained Baldelli-Hunt, could be addressed in amendments, but there is no guarantee they would be passed.
"You're going to take an individual at 61 and tell them until you're 80 years old, you're not going to receive a COLA increase. In turn we're going to need to give them heating assiatance, food stamps, housing ... because by the time they're 80 years old, they can no longer remain in their house. This is unbalanced. We have to consider the low earners,"she said.
"The totality of it is a net benefit for the city," said City Councilman Daniel Gendron. "I'd love to see a perfect plan passed, but it has to be viewed in it's totality."
Council members Roger Jalette, Stella Brien and Christopher Beauchamp each, in turn, provided reasoning why the bill should ultimately be passed, with or without amendments addressing the inequities.
"My goal is to make sure we don't get a bill for $6 million dollars next year because nothing was done," said Ward.