RI Pension Settlement more start than end of debate

Feb 15, 2014

In the famous words of Yogi Berra, `it ain’t over till its over.’ RIPR political analyst Scott MacKay explains why that’s the case with the latest twist in Rhode Island’s public employee pension settlement.

In many a long legal  battle, a settlement reached out of court marks the end of a contentious lawsuit. The opposing parties shake hands and sometimes share an odd drop. Then they put the dispute behind them.

That wasn’t the case last Friday, when Gov. Lincoln Chafee, General Treasurer Gina Raimondo and public employee union chieftains announced a settlement in union lawsuits challenging the state’s 2011 pension overhaul that cut benefits for public workers and retirees.

There were no high-fives or communal sips of fizzy champagne. That’s because, even after 13 months of tortuous closed-door negotiations, this agreement represents the beginning, not the end of Rhode Island government’s never-ending debate over public employee pension benefits and their cost to both workers and taxpayers.

The settlement deal restores a few cuts in public employee pension benefits  and planes down some of 2011 law’s rough edges. Yet its main feature is preservation of the bulk of the pension overhaul that trimmed state employee and retirement benefits, saved taxpayers hundreds of millions of dollars a launched the multi-billion dollar state retirement fund on a path to solvency over the next two decades.

This carefully compromise gave public workers and retirees a few concessions but nothing that would threaten the viability of the system. It represents a big compromise by the union leaders, who in effect tacitly acknowledged that that the generous benefits they once enjoyed are now consigned to the dustbin of Rhode Island political history because they are no longer sustainable given the size of our small state’s economy and taxpayer base.

The settlement, if approved, would finally remove from the state’s financial future the cloud of uncertainty caused by the six lawsuits filed against state government by unions. For a modest increase in state money two years from now – about $13 million in an annual budget of $8.5 billion – taxpayers get insurance against an adverse court decision that would hammer taxpayers and even perhaps bring state government to the brink of bankruptcy. If you think Rhode Island received bad national press from the financial collapse of tiny Central Falls, just think what the rest of the country and the national business community would think of our state if we were mentioned in the same headlines as Detroit.

The deal was along the lines suggested by Chafee. Unlike other state politicians, he isn’t burdened by any near-term political calculus because he isn’t running for reelection.

The settlement represents a backtrack by Raimondo, a Democrat locked in a three-way primary for her party’s gubernatorial nomination. In December, 2012, Chafee urged negotiations to settle the lawsuits. Raimondo, the major architect of the pension changes, protested. She said at the time that she wanted to pursue the matter in court and insisted the state had a strong case.

At that point, Raimondo was the darling of the neoconservative, anti-union right across the country. She was lauded by such reliably conservative outlets as the Wall Street Journal’s editorial page and the Manhattan Institute think tank.

Now Raimondo is running for governor in  primary where union workers and their families are a crucial constituency. Last week the Wall Street Journal editorial page accused her of ``going wobbly’’ in working on a compromise. But you could take all the Rhode Island Democratic primary voters who read the Wall Street Journal and hold their caucus in a room at the Biltmore. You wouldn’t need the presidential suite.

It was state Superior Court Judge Sarah Taft-Carter who forced the talks by ordering the parties into mediation. What emerged last week looks like a reasonable pact.

Yet it’s far from over. Now, the serious political campaign to win support for the deal kicks off. First, six separate groups of public employees have to vote on it. If any of those groups reject it, the deal  blows up. For example, retirees, who would get an immediate cost-of-living adjustment of 2 percent on the first $25,000 of their pension benefits, would get checks of $500 each.

Yet, for the retirees to get those checks, a majority of unionized public school teachers, voting as a bloc, have to approve the entire settlement .

So the state union leaders have their work cut out. They must convince their members that this was the best deal they could negotiate and better than risking an adverse court decision that would hurt their members even more.

If the workers and retirees, about 70,000 voters, approve, the pact goes back to Judge Taft-Carter for further approval. She has to certify that the votes were fair and parties acted in good faith.

If that hurdle is cleared, the settlement would head to the General Assembly just months before all 113 members face election year voters. The Assembly has no choice but to take some kind of an up-or-down vote on the deal. Any amendments would doom the settlement.

So far, House Speaker Gordon Fox, D-Providence and Senate President Teresa Paiva Weed, D-Newport, have made no commitments to take action this year.  They don’t want their members caught between conservatives who are already denouncing the deal as a taxpayer giveaway and union workers and retirees who support it.

The workers involved aren't the greedy cartoon version of public employees so often depicted in the media and especially on talk radio. They are the people who plow the snow, teach your children, tend to patients at Zambarano, police the streets, put out the fires, listen to your complaints at the DMV,  feed the students at URI, collect the taxes and fill the potholes.

One way legislative leaders can shield members from a tough vote would be to pull the time-honored  Smith Hill maneuver of sticking the settlement into the budget, forcing those who are protest it to cast votes against aid to their local schools and pet projects.

The settlement has already been blasted by some candidates for governor, including Republicans Allan Fung and Ken Block, and Dan Beardsley, the lobbyist for city and town officials. One thing we know for sure. In an election year it won’t matter how reasonable this deal looks to state and union leaders. Prepare for a noisy, even foolish, debate about a topic lots claims to care about but few know much about.

If you’re a state representative, think about it. Hey, rep, do you really wanna tell the elderly gent  at the Portuguese Club guy that he doesn’t deserve his $500 because it might havbe an impact on something called an unfunded liability 20 years from now?  What do you reply  when he says, ``hey rep I’m not going to be eligible again for another four years, and you may be at my wake by then.’’

Ah, the vagaries of local politics in Rhode Island!