Following Providence Mayor Angel Taveras' proposed budget address Monday, two city council committees - the subcommittee on pension sustainability and the ordinance committee - unanimously recommended that the city council pass Taveras' Providence Pension Protection Plan, which would suspend cost-of-living increases for all city retirees. The council is set to vote on the measure tomorrow night.
The plan would save $16 million in the next fiscal year, according to a press release from the mayor's office. The savings from the measure are already incorporated into the proposed budget, which would reduce the city's operating budget by almost $3 million, Taveras said at the address Monday.
The plan would incorporate a freeze on all COLAs for city retirees until the system is at least 70 percent funded. The current system is only funded at 32 percent, the Providence Journal reported yesterday. The suspension would reduce the city's unfunded pension liability by more than $236 million, according to the Taveras administration.
"Our pension system is unsustainable and blocking our path to progress," Taveras said in the press release.
Taveras' plan also includes a measure to cap pensions at one and half times the average Rhode Island household income and a new mandate requiring workers to contribute to their pensions yearly until they choose to retire, the ProJo reported.
Paul Doughty, president of the Local 799, a chapter of the International Firefighter's Union, said he was astonished by how quickly the council is pushing the measure forward.
While the media has spotlighted the few high pensions that the city awards some retirees, Doughty said the average annual pension is around $25,000. He added that these families are especially dependent on the COLAs.
"I will readily admit that the top tier needs to be addressed, but this is not a one-size-fits-all solution," Doughty said. "I think we're running headfirst into a disaster."
The unions have been attempting to negotiate with the city on the issue but "the city is not giving us the chance (to negotiate)." Doughty said he wants to see a plan where retirees receiving the lowest pensions are able to maintain their COLAs. But if the current plan is passed Thursday, the unions will inevitably bring the city to court, Doughty said. "If (the plan) is overturned in court, it would almost guarantee the city is pushed into bankruptcy."
Members of the city council were unavailable to comment on the issue.
