R.I. Taxpayers Urges RI Senate to Reject 2016 Budget Due to Pension Reform Settlement

PROVIDENCE, RI – R.I. Taxpayers is urging the Rhode Island Senate to reject the 2016 budget because it contains the pension reform settlement.

“We have concerns about several aspects of the 2016 budget,” noted R.I. Taxpayers Communications Director Monique Chartier.  “But the implications of this particular budget article are by far the longest-reaching and most costly for state and local taxpayers.”

“R.I. Taxpayers came out early against any settlement of the pension reform lawsuit,” pointed out R.I. Taxpayers President Larry Girouard.  “The state and cities and towns lack the additional money required under the settlement.  But the situation is even worse now because of new accounting rules which go into effect next year, under which the state’s unfunded liability will rise by $2.7 billion and the funded ratio will decline by approximately 20 percent.  This will necessitate a significant increase in taxpayer contribution to pension funds.  Where will this additional money come from?  Perhaps most importantly, a court ruling on the vital matter of the constitutionality of the 2011 pension reform is needed for both taxpayers and retirees.  There is a real danger that the General Assembly’s approval of a settlement, in place of a lawsuit and court ruling, will convert state pension benefits into a contractual obligation.”

Girouard refers to the new government accounting rules known as GASB 68, which go into effect next year for state and local pension plan reporting.

“The General Assembly needed to do their own cost assessment of the settlement,” emphasized R.I. Taxpayers Co-Chairman Larry Fitzmorris.  “The true financial impact of the settlement under GASB 68 has not been properly disclosed and the fallout will be both predictable and alarming.  Cities and towns are likely to be angry as they are pressured to make higher contributions under the new GASB 68 standards.  Vested workers and retirees will feel misled, as well they should, that the date of achieving 80 percent funding necessary to restore COLAs will be pushed much further into the future.  Taxpayers will also be very displeased, and understandably so, when they realize that state officials have been hyping the pension settlement with financial spin via outdated financial figures.”

“Passage of the pension settlement legislation would severely impair the ability of the General Assembly to accomplish additional reforms in the future. The Senate can only consider approving the settlement after thoroughly scrutinizing the legal and financial risks involved and amending it to explicitly declare that state pension benefits are non-contractual and subject to revision as necessary to serve the public interest,” concluded Girouard.  “To do otherwise will disserve taxpayers and retirees in the short and long term by placing them in a seriously untenable position, financially and legally.”

Rhode Island Taxpayers advocates for honest, effective and fiscally sound government on behalf of Rhode Island Individual and Business Taxpayers

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