RI legislators consider vote on benefits cuts to "future" retirees and not current retirees
From John Curry, April 8, 2010
"The cost-cutting plan would limit the annual increases in the retirement pay for future retirees to their first $35,000 in pension benefits."
Update: Deficit cutting plan targets state aid, pensions
Apr 8, 2010
By Steve Peoples and Katherine Gregg
PROVIDENCE, R.I. -- The House budget-writing committee is expected to start voting in about an hour on a $220-million deficit cutting plan for this year that, while guaranteed to generate angst and controversy in state and local government circles, cuts municipal aid and pension benefits by far less than Republican Governor Carcieri proposed.
The plan has not yet been made public.
But House Speaker Gordon D. Fox confirmed several of the key pieces in an interview after the Thursday House session. Among them:
The cost-cutting plan would limit the annual increases in the retirement pay for future retirees to their first $35,000 in pension benefits.
It would cut anticipated state reimbursements to the cities and towns for car taxes they are barred from collecting by about $17 million between now and the June 30 end of this fiscal year. That is a quarter of the municipal aid cut Carcieri proposed.
The bill would also require that any future contract with municipal workers require that they pay at least 15 percent of the cost of their health insurance coverage, which is the minimum that state employees currently pay.
This minimum co-sharing requirement took labor leaders by surprise, and led to threats of potential political retaliation.
AFL-CIO president George Nee called the co-share "a totally unacceptable intrusion into collective bargaining.'' He said that as of 2 p.m., it was not part of the House's budget plan, and blindsided labor leaders gathered at the State House to await the official unveiling and vote on the revised spending plan.
He vowed to "aggressively lobby every member of the House'' in the coming days to remove the provision from the package. Noting that "this is an election year,'' he said "it could be a factor in how endorsements are made.''
On the state aid front, Carcieri initially sought to withhold $65.1 million in 3rd and 4th quarter state reimbursements to the cities and towns for car taxes they have been blocked from collecting since lawmakers adopted a now-abandoned plan to phase out these local taxes entirely.
Unable to spare the communities fully, House leaders are proposing to cut their 4th quarter payment in half.
On pensions, Carcieri wanted to save at least $45 million in state and local dollars by eliminating the promise of annual pension increases to future retirees, including state workers and public school teachers.
Putting these benefits in perspective, the average pension paid a retired state worker in Rhode Island today is $25,400; a retired teacher, $42,356; a retired police officer or firefighter in one of the cities and towns, $26,399, and other municipal workers, $12,319.
The vast majority of these retired state workers and teachers get 3-percent compounded annual increases in their benefits. Some future retirees still qualify, but for many, this guaranteed increase has already been scaled back to a level that matches the annual cost-of-living index, up to a maximum of 3 percent.
Unwilling to eliminate this pension promise entirely in an election year, in the face of heavy resistance from the public employees unions, the lawmakers looked instead at variations on what Massachusetts has done for years and that is to limit its annual 3 percent COLAs to the first $12,000 in retirement pay, or $360 a year.
In the end, it appears they settled on a proposal that will provide annual increases of up to 3 percent on the first $35,000 in retirement pay given future retirees.
Since that will not save as much as Carcieri's plan would have saved, they also looked at stretching the payment of the state's $4.3 billion in unfunded pension liabilities over a much longer period of time in a move akin to refinancing a mortgage that costs less now, more over the long-term. It remains unclear where they stand on that issue.
House leaders put the rank and file lawmakers on notice they will be briefed on this still unseen budget bill on Monday, and asked to vote on it Tuesday, so they can get it to the Senate before their spring break.
"The cost-cutting plan would limit the annual increases in the retirement pay for future retirees to their first $35,000 in pension benefits."
Update: Deficit cutting plan targets state aid, pensions
Apr 8, 2010
By Steve Peoples and Katherine Gregg
PROVIDENCE, R.I. -- The House budget-writing committee is expected to start voting in about an hour on a $220-million deficit cutting plan for this year that, while guaranteed to generate angst and controversy in state and local government circles, cuts municipal aid and pension benefits by far less than Republican Governor Carcieri proposed.
The plan has not yet been made public.
But House Speaker Gordon D. Fox confirmed several of the key pieces in an interview after the Thursday House session. Among them:
The cost-cutting plan would limit the annual increases in the retirement pay for future retirees to their first $35,000 in pension benefits.
It would cut anticipated state reimbursements to the cities and towns for car taxes they are barred from collecting by about $17 million between now and the June 30 end of this fiscal year. That is a quarter of the municipal aid cut Carcieri proposed.
The bill would also require that any future contract with municipal workers require that they pay at least 15 percent of the cost of their health insurance coverage, which is the minimum that state employees currently pay.
This minimum co-sharing requirement took labor leaders by surprise, and led to threats of potential political retaliation.
AFL-CIO president George Nee called the co-share "a totally unacceptable intrusion into collective bargaining.'' He said that as of 2 p.m., it was not part of the House's budget plan, and blindsided labor leaders gathered at the State House to await the official unveiling and vote on the revised spending plan.
He vowed to "aggressively lobby every member of the House'' in the coming days to remove the provision from the package. Noting that "this is an election year,'' he said "it could be a factor in how endorsements are made.''
On the state aid front, Carcieri initially sought to withhold $65.1 million in 3rd and 4th quarter state reimbursements to the cities and towns for car taxes they have been blocked from collecting since lawmakers adopted a now-abandoned plan to phase out these local taxes entirely.
Unable to spare the communities fully, House leaders are proposing to cut their 4th quarter payment in half.
On pensions, Carcieri wanted to save at least $45 million in state and local dollars by eliminating the promise of annual pension increases to future retirees, including state workers and public school teachers.
Putting these benefits in perspective, the average pension paid a retired state worker in Rhode Island today is $25,400; a retired teacher, $42,356; a retired police officer or firefighter in one of the cities and towns, $26,399, and other municipal workers, $12,319.
The vast majority of these retired state workers and teachers get 3-percent compounded annual increases in their benefits. Some future retirees still qualify, but for many, this guaranteed increase has already been scaled back to a level that matches the annual cost-of-living index, up to a maximum of 3 percent.
Unwilling to eliminate this pension promise entirely in an election year, in the face of heavy resistance from the public employees unions, the lawmakers looked instead at variations on what Massachusetts has done for years and that is to limit its annual 3 percent COLAs to the first $12,000 in retirement pay, or $360 a year.
In the end, it appears they settled on a proposal that will provide annual increases of up to 3 percent on the first $35,000 in retirement pay given future retirees.
Since that will not save as much as Carcieri's plan would have saved, they also looked at stretching the payment of the state's $4.3 billion in unfunded pension liabilities over a much longer period of time in a move akin to refinancing a mortgage that costs less now, more over the long-term. It remains unclear where they stand on that issue.
House leaders put the rank and file lawmakers on notice they will be briefed on this still unseen budget bill on Monday, and asked to vote on it Tuesday, so they can get it to the Senate before their spring break.
posted by Kathie Bracy at 6:50 PM
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