pensions

With the aftermath of this week's Boston Marathon attack remaining in the forefront of headlines, we're keeping the focus on politics in my Friday column. Thanks for stopping by; as always, your tips and thoughts are welcome at idonnis (at) ripr (dot) org.

Cranston Mayor Allan Fung joins Bonus Q+A to talk about why he's a Republican, his potential race for governor next year, and what Rhode Island should do to improve its economy, among other issues.

Ian Donnis / RIPR

Cranston Mayor Allan Fung joins the Roundtable this week to discuss the aftermath of the attack at the Boston Marathon, the merits of negotiated pension settlements, his potential gubernatorial campaign next year, and other issues.

Ian Donnis / RIPR

In what Providence Mayor Angel Taveras calls a historic day, Superior Court Judge Sarah Taft-Carter gave final approval Friday for a deal that will reduce the capital city's $900 million+ unfunded pension liability by $178 million. The agreement followed negotiations between the city and police and fire unions and municipal retirees.

"Today is the end of a long, long road that we've traveled," Taveras said in an interview. "I feel a lot of relief and gratitude to all the employees and retirees especially who have agreed to help the city."

Providence Mayor Angel Taveras' latest State of the City speech celebrates the value of overcoming complex problems through collaboration -- a not-so-subtle contrast with the state pension overhaul championed in 2011 by the mayor's prospective Democratic gubernatorial rival  in 2014, state Treasurer Gina Raimondo.

In comments Tuesday evening to the City Council, Taveras notes the contrast to February 2012 when "Providence was running out of cash, and running out of time. In the months that followed, there were some who said Providence could not avoid filing for bankruptcy."

Moody’s Investors Service is giving Providence mixed comments on its fiscal condition.

Moody’s says an audit revealing a $15 million Providence deficit for the last fiscal year could hurt the city’s credit rating. But it says Providence now has a balanced budget, and it calls that a sign of progress toward restored fiscal stability.

Mayor Angel Taveras inherited a $110 million deficit when he took office in 2011. Moody’s says a series of previous deficits caused by state aid cuts leave Providence little room for error if other revenue gets squeezed.

Rhode Island’s $7 billion+ pension fund — which is banking on an expected rate of return of 7.5 percent to pay its long-term obligations — earned just 1.4 percent over the fiscal year that ended June 30.

State Treasurer Gina Raimondo, who chairs the state Investment Commission and sparked the move last year to lower the pension fund’s expected rate of return, says she doesn’t think the state’s expected 7.5 percent rate of return is too optimistic. In an interview, she said:

Rhode Island’s $7 billion+ pension fund — which is banking on an expected rate of return of 7.5 percent to pay its long-term obligations — earned just 1.4 percent over the fiscal year that ended June 30.

State Treasurer Gina Raimondo, who chairs the state Investment Commission and sparked the move last year to lower the pension fund’s expected rate of return, says she doesn’t think the state’s expected 7.5 percent rate of return is too optimistic. In an interview, she said:

The Rhode Island Supreme Court has declined a state motion to stay the big pension case pending before Superior Court Judge Sarah Taft-Carter. Via news release:

In the matter of Rhode Island Public Employees’ Retiree Coalition et al v. Lincoln Chafee et al, the Supreme Court today declined to intervene in the union and coalition lawsuits against the state regarding the Rhode Island Retirement Security Act of 2011.

In sharp contrast to Governor Lincoln Chafee, House Speaker Gordon Fox is siding with state Treasurer Gina Raimondo’s argument that the time for negotiating last year’s pension overhaul is over.

Fox’s stance is pivotal; without his support, changes to the pension overhaul are a non-starter in the General Assembly.

Fox offered this statement to RIPR:

High-profile lawyer David Boies’ request to practice law in Rhode Island is expected to be considered by Superior Court Judge Sarah Taft-Carter early Friday, according to court spokesman Craig Berke. That’s the same morning when Taft-Carter is slated to hear a state motion to dismiss a union challenge to last year’s pension overhaul.

The granting of permission for an out-of-state lawyer to practice in Rhode Island is usually a formality.

Governor Lincoln Chafee used a November 13 letter to state Treasurer Gina Raimondo to broach the possibility of seeking a settlement to the pension lawsuit.

The ensuing correspondence offers some insight into the two officials’ viewpoints and their personal styles. 

In a letter on his official stationery, Chafee crossed out “Treasurer Raimondo” salutation, replacing it with a handwritten “[Dear] Gina”:

As might be expected for an elected official, state Treasurer Gina Raimondo isn’t making any bold predictions about the outcome of a court case challenging last year’s pension overhaul.

Robert Walsh, executive director of the National Education Association Rhode Island, has never been shy with his opinions. And he’s confident that unions will succeed in legally overturning the state’s much-ballyhooed pension overhaul of 2011.

State Treasurer Gina Raimondo has offered the following statement in response to lawsuits filed today challenging the state’s pension overhaul:

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