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Wed September 14, 2011
Unions win first pension battle
By SCOTT MACKAY
PROVIDENCE, RI – Rhode Island's public employee unions have won the first round in the contentious joust over state pension benefits. But a court decision may jeopardize the ability for a special session being able to make definitive decisions.
Superior Court Judge Sarah Taft-Carter has denied state government's attempt to establish that the state can unilaterally reduce the pension benefits and cost-of-living benefits of state employees and retirees.
"This is step one and we have a lot of steps to go,'' said Lynette Labinger, lawyer for the unions representing a wide spectrum of Rhode Island public employees, who was clearly thrilled with the decision.
Lawyers for the state had asked the court to throw out the case, asserting that employees have no property or contract rights to pensions. But Taft-Carter said in a 39-page decision that the state legislature and administration does not have the sole right to change the terms of state pensions.
"The state was basically saying that we had no right to be heard,'' said Labinger. "The court said that the state's position that it can "significantly alter or completely terminate a public employee's pension benefits at any time is untenable.''
The decision is important because Taft-Carter said clearly that the state may not take away state pension benefits "at the whim of the state.''
Rhode Island and many other states around the nation are struggling with huge unfunded pension liabilities that threaten the financial foundation of state and municipal governments.
In Rhode Island's case, the state faces an unfunded liability of at least $7 billion, a figure that is more than twice the amount of the state's General Fund annual state budget.
At issue in the lawsuit were changes stemming from legislative measures approved in 2005 and 2009 that cut pension benefits and trimmed cost-of-living requirements to employees in an effort to save about $60 million in the current state budget year.
Governor Lincoln Chafee said the decision carries huge financial ramifications for the state and vowed to appeal.
In her decision, Taft-Carter acknowledged that the issue of precisely what contractual or property rights an employee has are legally murky.
State Treasurer Gina Raimondo and Governor Lincoln Chafee have pushed for a special Assembly pension session next month to overhaul the state pension system to make it more affordable to taxpayers. Today's decision may jeopardize that session being able to make definitive decisions. And it will inevitably mean that both sides will be heading back to the court house, and perhaps, to the negotiating table.
We're in the first inning of a nine inning game. The unions have hit a lead off home run but there are a lot more innings to play.
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