RIPR News
4:57 pm
Mon December 24, 2012

The battle over the state pension system will spill into 2013

PROVIDENCE, RI – After the usual starts and sputtering stops, it looks like the combatants in the state public pension joust will be sitting down to try to forge a compromise on the legal issues that have landed Rhode Island's landmark pension overhaul in court.

Superior Court Judge Sara Taft-Carter has ordered the state and the unions to participate in mediation in the lawsuit that challenges the 2011 pension law that cut benefits to state employees and retired state workers. These negotiations are perilous, given the mix of substance, complexity and political ambition involved.

There is little doubt that two of the major players, General Treasurer Gina Raimondo and Gov. Lincoln Chafee, eye each other warily. Chafee would like to be reelected governor in 2014, a position Raimondo might be putting on her Christmas list for next year.

Raimondo was the chief architect of the 2011 pension changes that cut retiree benefits, but Chafee supported the legislation. The governor tried to make it go even further by applying it to city and town pension systems that mostly cover fire fighters and police officers.

State employee unions filed suit, arguing that the pension overhaul action amounts to a promise broken to state employees and retirees who played by the rules and made the pension contributions required under the law. The unions have won in the initial legal skirmishing. Now, Superior Court Judge Sara Taft-Carter has ordered mediation in an effort to get the state and the unions to forge a settlement.

Raimondo wanted to push the legal case further before negotiating, while Chafee met with union leaders and urged talks. Now it is up to the unions and the state to save voters and taxpayers a lengthy and divisive legal scrum.

Among the business community and Rhode Island's feckless Republican Party, there is a belief that organized labor controls the General Assembly and gets what it wants. That isn't the case in recent years, but the perception hovers over Rhode Island's political culture.

Former Republican Gov. Donald Carcieri famously said that labor had a ``stranglehold'' over the State House. But Carcieri was able to get reductions in pensions through the Assembly and the Raimondo-authored overhaul also was approved overwhelmingly.

Organized labor has regularly been on the losing end of Smith Hill battles since the 1980s, when the Assembly repealed strikers benefits. Labor lost its campaign to keep two-year gubernatorial terms, to increase taxes on the wealthy and to fend off the Separation of Powers Constitutional Amendment, that was a big fight over curbing the legislature's power.

The decline in labor's power has tracked the drop in union membership in the wider economy, especially in the private sector. As recently as the 1960s, more than one third of Rhode Island workers were unionized. Now that figure is about 17 percent.

Can labor survive as a political force if unions represent only public employees who are paid by the taxpayers? It is easy to tar unions as just another special interest when their members are largely public workers. Yet, labor leaders have been willing to compromise in the past if they believe they are being dealt with in good faith by politicians who keep their word.

In the 1990s, Rhode Island was able to lure Fidelity Investments to Smithfield. But just before the new office building was to be built, Fidelity executives demanded that non-union companies have a shot at getting construction work. They did not want a 100 percent union job. Then-Gov. Lincoln Almond met privately with top labor leaders, including George Nee, who was then secretary-treasurer of the AFL_CIO, and Frank Montanaro, the AFL-CIO president. The unions agreed to a mixed labor construction job and Fidelity has been a job-generating success. When other projects were built, such as the Providence Place Mall and the University of Rhode Island's Ryan Center, the state ensured they would be all union jobs.

Can union leaders step up now and agree they must make concessions on pensions to keep the state solvent and make sure younger union workers will have a decent retirement?

An agreement is the best way out of this legal conundrum for all parties. Without a deal, the lawyers will continue an endless battle. And the losing side will be back knocking at the State House door, seeking changes they want.

It would be wonderful if this season of good will carries on beyond tomorrow. Merry Christmas to you and yours!

Do you have insight or expertise on this topic? Please email us, we'd like to hear from you. news@ripr.org.