PROVIDENCE REPUBLICAN
CITY COMMITTEE
NEWS RELEASE
| Release Date | 2019-04-04 |
| Subject | Providence GOP Leaders On Mayor Dropping Plan To Monetize Providence Water System |
| Contacts | DAVID TALAN < DaveTalan@aol.com > |
| WILLIAM RICCI < ProvidenceRepublican@gmail.com > |
The Co-Chairs of the Providence Republican Party, David Talan and William Ricci, applaud Mayor Jorge Elorza for dropping his proposal to monetize the Providence water system. They have offered suggestions, on what he should do next, instead, to avoid bankruptcy.
The Mayor's plan was designed to protect the city's pension and health plan for retirees, which is an estimated $2,000,000,000 in debt (or $12,000 for every man, woman & child in the city). The Mayor's plan was also designed to delay the city of Providence going into bankruptcy, until a new Mayor is in office.
Talan and Ricci had previously given 3 reasons for their opposition to the Mayor's water supply plan: that it would cause water rates to skyrocket; that it threatened to pollute the water supply; and that it did nothing to resolve the overall financial problem with the pensions, and prevent the problem from reoccurring in the future.
Talan and Ricci do agree with Mayor Elorza on one thing. If we do nothing about the unfunded pension & health plans, the city will definitely go bankrupt in the near future, and this would be a very bad thing for Providence residents. The Mayor has demanded that opponents of his water plan should offer an alternative. So the GOP leaders offer the following ideas to cut costs, instead of raising taxes and fees.
Some retirees are making so much money, that they would have to take a pay cut, if they came out of retirement to go back to their old job. This is due to excessive cost-of-living adjustments (greater than the rate of inflation) given to employees during the Cianci administration. No retiree should collect more money than current workers doing their old job, and their pensions should be reduced accordingly.
No retiree should be able to collect a pension before the age of 60. Now, some employees retire in their 40's, collect a pension immediately, and go to work in another job. When Governor Raimondo reformed the state employees retirement system, she raised the minimum age for all current and future employees to collect a retirement pension. Providence needs to do the same.
The city should get out of the pension business entirely. New employees should receive an Individual Retirement Account (IRA), which they own themselves. The city of Cranston did something similar a few years ago. Under Mayor Allan Fung, 401(k) retirement plans began in 2010 for the Teamsters Union, and in 2015 for the Laborers Union. We should follow Cranston's example.
The Mayor has previously rejected these suggestions. He has said any changes to the union contracts are off the table, due to a consent decree signed by his predecessor. And he has said that if the city goes bankrupt, an overseer might sell the water system anyway.
The Providence Republican leaders have consulted with the top R.I. expert on municipal bankruptcies (Judge Robert Flanders, who managed the bankruptcy in Central Falls). They learned the following. If the city were to go bankrupt, the absolute last thing that an overseer would do is to sell the city's assets. The first thing he would do is to force the unions to renegotiate contracts. The threat of losing everything would be enough to force them to negotiate seriously. When Central Falls went bankrupt, retirees lost up to 60 percent of their pensions. If Providence were to go bankrupt, retirees would probably lose everything. (Changes in law, since the Central Falls bankruptcy, give first preference to bond holders, and retirees can only get what is left, if anything.). This serious threat would be enough to bring them to the table.