Local mayors much more leeway to reform the state pension plans

Puisque nos villes se dirigent vers un krach.

Nos voisins du Sud changent des lois pour réduire les prestations des retraites dorées accordées par des politiciens plus avides à rester aux pouvoirs que de gérer en bon père de famille.

Les retraites dorées, sachant tous qu’ils sont insolvables, certains politiciens courageux attaquent le problème de fonds en essayant de rééquilibrer les finances entre les attentes des syndicats et les contribuables.

Pendant des décennies, le chantage syndical grâce à leur monopole a obtenu des privilèges au-dessus de la capacité de l'État ou de la ville, il est grand temps qu'il y ait un meilleur équilibre entre les employés du  secteur public et les vrais générateurs de richesse, le privé.

Extrait de : Rhode Island Gears up for Fight Against Blue, Via Media, The American Interest, 23 Mars 2012

Rhode Island took a major step forward in its fight against big blue on Thursday, announcing a new plan that will give local mayors much more leeway to reform the state pension plans that are driving many municipalities to the brink of bankruptcy. Boston.com reports that  Governor Lincoln Chafee, an Independent, plans to allow localities to cut back on benefits and payments to retirees, end automatic salary hikes for state employees, and reduce the number of state employees mandated by law.

This is a step in the right direction for a state that has been called the “Athens of America” for its years of allowing politicians and unions to collude in raising pensions and benefits for state workers with little consideration of the state’s shaky budget. While this proposal will not be enough to undo years of myopic, expensive legislation, it is at least a sign that state politicians are aware of the problem they face and are willing to confront it.

Pauvre Québec, on n’est même pas rendu là, c’est peut-être une raison, pourquoi nous sommes le troisième plus endetté du monde.

Predictably, state unions and some politicians have vowed to fight the proposal, but a surprising number of the state’s politicians, who are mostly Democrats, have signed on. Mayors have welcomed the move, which will help them patch up their budget gaps, of which Providence’s $22 million deficit is only the most prominent example.

These cuts will be painful, but delaying them would be far worse. The basic facts can only be ignored for so long, and it’s good to see that Rhode Island has decided to face reality.

Extrait de: RI gov. unveils plan to cut local pension costs, By David Klepper, Boston.com, March 16, 2012

PAWTUCKET, R.I.—Rhode Island Gov. Lincoln Chafee on Thursday announced his long-awaited plan to give cities and towns greater power to reduce benefits to retired municipal workers -- something mayors across the state say is vital to restoring their fiscal health.

Chafee, an independent, also proposed giving leaders in the state's most distressed communities more oversight of education costs, an end to required teacher raises based on seniority, and relief from the requirement that safety monitors ride along on school buses.

The proposal would represent a sequel of sorts to sweeping changes made last year to the state-run pension system covering teachers, state workers and many municipal employees. But Chafee said more work remains because those changes didn't apply to city-run pension plans that face a combined $2 billion unfunded liability.

"We can let the communities go into bankruptcy, we can let them raise their property taxes up, up, up or we can take action,"

Chafee said at Pawtucket City Hall, backed by several mayors.

Allo, y a-t-il quelqu'un au Québec qui écoute ?

Union leaders vowed to fight the proposal in the state's General Assembly -- and the courts if necessary. Rhode Island AFL-CIO President George Nee said Chafee's proposals represent a significant attack on both public workers and the sanctity of labor contracts.

"This would give them (cities) the power to go in and just decimate existing contracts," he said. "Either contracts mean something or they don't."

Mayors praised Chafee for trying to give them the tools to address rising pension costs that they say are crippling city budgets. Woonsocket Mayor Leo Fontaine noted that this week school officials in his city considered -- but rejected -- a proposal to end the school year early because of a $10 million education budget deficit. The city has already eliminated positions, closed fire stations and darkened street lights to save money.

"We are on the brink," he said. "A lot of cities and towns are at the end of their ropes."

Chafee's proposal now heads to lawmakers, still smarting from a bruising fight with unions over last fall's overhaul.

States across the country are grappling with public pensions as rising costs, the economy and investment losses expose weaknesses in state pension funds. More than half the states have made some changes to pensions, most recently New York, where officials this week struck a deal to raise retirement ages and increase contributions from future employees.

But no state has made changes as drastic as those in Rhode Island. The Pew Center on the States reviewed scores of pension changes made by nearly half the states in the past decade and determined that Rhode Island's overhaul was "unprecedented."

Lawmakers voted in November to suspend automatic cost-of-living pension increases for at least five years, adjust retirement ages and give most current employees a new retirement plan that mixes a traditional pension with a 401(k)-like account. The changes were designed to save billions in future years.

Revamping the state's 36 locally administered pension plans may be more challenging. That's because local plans are set through contract, not statute, making it legally more difficult for cities to go back on promised benefits.

Opposition is expected to be strongest in the Senate, where Democratic President Teresa Paiva Weed has warned against a "quick fix" to local pension plans. She has said she wants to see local governments attempt to negotiate concessions with unions before making unilateral changes.

Paiva Weed and Democratic House Speaker Gordon Fox opted not to comment directly on Chafee's bill Thursday, releasing a statement saying only that "the Senate and House are committed to continue working with the administration to address the financial challenges the cities and towns face."

Rep. Jon Brien, D-Woonsocket, was more direct. Brien chairs the House Municipal Government Committee.

"Being from a hyper-distressed community, any relief we can get is going to benefit us," he said. "But this is a different animal, because you're dealing with contracts. The zeal to take on pensions was there last year. But the wind is not at the governor's back now."

Providence Mayor Angel Taveras said his city must try to reduce pension costs whether Chafee's proposal passes or not. But he said Chafee's proposal would put the city on far firmer legal grounds for doing so. He has warned that Providence is facing an estimated $22 million budget gap and could be forced into bankruptcy.

"We certainly expect to be sued" by retirees and workers, Taveras said. "This would strengthen our case."

Aside from his pension proposal, Chafee also wants to impose new limits on disability pensions if the disabled retiree can work another job. He's also proposing to prohibit cities from offering pension plans that are more generous than the state-run plan.

Finally, Chafee wants to give special help to "highly distressed" cities and towns, a criteria-based distinction that currently applies to Woonsocket, Providence, Pawtucket and West Warwick.

Cities deemed "highly distressed" could ignore state laws that require schools to pay for private school busing, place safety monitors on elementary school buses and base teacher raises on seniority.

While mayors cheered Chafee's proposals Thursday, they acknowledged that they won't help with acute cash-flow problems that have threatened to delay worker paychecks, reduce city services or, in Woonsocket's case, shutter schools. Woonsocket has about three weeks of cash left, Fontaine said.

"This still doesn't answer where we're going to get the money from," he said.