PROVIDENCE REPUBLICAN
CITY COMMITTEE
NEWS RELEASE
| Release Date | 2022-02-02 |
| Subject | Providence GOP Opposes Elorza Pension Borrowing Plan |
| Contacts | DAVID TALAN < DaveTalan@aol.com > |
| WILLIAM RICCI < ProvidenceRepublican@gmail.com > |
The Co-Chairs of the Providence Republican Party, David Talan and William Ricci, have opposed Mayor Elorza's proposal to borrow $500,000,000, in order to temporarily keep the city's pension system from going bankrupt. They noted that the Mayor's proposal does nothing to correct the problems that brought us to this point, and nothing to prevent them from reoccurring in the near future. It recklessly gambles the city's money, hoping that return on investment will be greater than interest costs. The GOP leaders offered 4 suggestions to really fix the problem long-term; including getting out of the pension business entirely, for all new employees.
The city currently has a $2,200,000,000 unfunded liability for pensions and other benefits. (This is $12,000 for every man, woman & child in the city). The $93,000,000 that the city pays each year, to temporarily keep the pension system afloat, is money that is not available for fixing potholes; plowing snow; maintaining parks; hiring an adequate number of police; keeping schools warm, safe & dry; and other basic city services; as well as holding down high property taxes.
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.
Unfortunately, more than 80 percent of the $93,000,000 annual contribution goes to people who are already retired, so we need to do something to reduce those costs. For employees who are already in the pension system, do the following:
- Reduce the pensions of retirees who get so much money, that they would have to take a pay cut, if they came out of retirement, and went back to their old jobs. (Cost Of Living Adjustments—COLA's—agreed to by some previous Mayors, have allowed some retirees to collect exorbitant amounts, far beyond what current employees make.)
- Raise the minimum age to start collecting retirement benefits, up to age 60. When former 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.
- Increase the amount that current employees contribute to the system. The Police and Fire Unions recently agreed to a significant increase in the percentage that they pay into the system in each pay period. But it is still not enough. And all the other city unions need to do the same.
The GOP leaders concluded, "If, and only if, we fix this system once and for all, should we even consider borrowing money. If we do not do this, the city will eventually have to declare bankruptcy, and retirees will lose everything, anyway." They added, "City unions may fight this. They need to look at what happened to Central Falls retirees, who lost most of their pensions, when that City went bankrupt a few years ago. If they do not want the same thing to happen to current and future Providence retirees, they will have to consider this."