July 17, 2011

Not One But Two Rhode Island Cities Make List of "14 Cities That Are Being Eaten Alive By Public Sector Workers"

Monique Chartier

Business Insider compiles the latest national list of dubious distinction to contain Rhode Island - in not one but two spots. This is especially not good when the list is only fourteen finalists long.

Public employee costs account for a large share of municipal budget woes. While worker compensation accounts for just 30% of state spending, personnel costs tends to eat up between 70% and 80% of local government funds.

Skyrocketing employee costs — the result of overly generous union contracts, an aging workforce, and bad pension investments — are now pushing several municipalities to the brink of fiscal ruin. Without union concessions or substantial reform, these cities will edge closer to insolvency while residents pay higher taxes for deteriorating public services.

Paging down, I expected to find Centrals Falls on the list, inasmuch as the direness of its fiscal problems is such that the city was recently the subject of national coverage in the AP, the New York Times and NPR. But coming also upon Providence was a bit of a shock.

Here's a partial list of the reasons. (The article cites a Ted Nesi post from June as the source of the info, by the way.)

A large part of Providence's structural deficit is caused by city retiree costs, which eat up 50% of the city's tax revenues.

The city-run pension system is only about 34% funded and has an unfunded liability of at least $829 million. The city has made its full annual pension contribution only three times since 1995.

No wonder Providence Mayor Angel Taveras was way out on a political limb Friday, along with Mayor Scott Avedisian and Mayor Allan Fung. From a Barbara Polichetti article in yesterday's Providence Journal with the headline, "3 R.I. mayors agree: Current retirees must be part of pension fix".

“The truth is that unless we address existing pensions, we’ll be back in this situation shortly,” said Taveras. Otherwise, he said, the cost to taxpayers and current public employees still paying into state and local pension plans will be “unsustainable.”

“The retirees have to be impacted,” Fung said. “It’s a fundamental fairness question. We cannot keep putting [pension costs] on the backs of our current employees and the taxpayers.”

Their remarks came as part of a special pension forum held for alumni and guests of Leadership Rhode Island Friday morning in the auditorium at The Providence Journal.

(Side note: a scheduling conflict prevented the mayor of Central Falls from attending the forum: he was busy giving a seminar entitled "Board-Up Bonanza: How to Rip Off Property Owners While Your City is Flying Off a Fiscal Cliff" ...)

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The question begs "Where will the money come from to fix things?" The answer? From the dwindling private sector producing class. The outcome will be fiscal disaster. Ostrich head in the sand politics and hand in the till politicians (see Hummel link in Moniques article). It is the Neverending Story in RI.

Posted by: ANTHONY at July 17, 2011 4:50 PM

That magazine just hates brown people...

Posted by: Tommy Cranston at July 18, 2011 8:15 AM

This medal of honor is only because we are TWICE as corrupt and been doing this TWICE as long as any other local government.

Posted by: dave at July 18, 2011 10:56 AM

This medal of honor is only because we are TWICE as corrupt and been doing this TWICE as long as any other local government.

Posted by: dave at July 18, 2011 11:02 AM

New York, LA, Chicago... three of the largest cities in the US, pretty enlightening, and fairly shocking as well.

5 cities in California alone, that state is a disaster. Not only is the state completely screwed, so are several of it's largest cities.

Move west.. er, uhm.. SOUTH young man.

Posted by: stuckhereinri at July 18, 2011 2:56 PM

Ok, I'm no David Cicilline fan, but when* is Buddy Cianci going to man up and start taking some of the blame for this mess? He was running the show (with an iron fist, no less) in Providence for almost 25 years, when most of these ridiculous pension shenanigans were taking place. Cici has to answer for his own two terms, yes, but you can't blame him for what took place between 1975 and 2002.

(*I'll answer my own question, which is *never*, but it still needed to be asked)

Posted by: Chris at July 18, 2011 6:08 PM

"when* is Buddy Cianci going to man up and start taking some of the blame for this mess? "


When he runs for Congress?
Until then, who cares. He's as relevant as Doorley, Garrahy and Noel.

Posted by: Tommy Cranston at July 18, 2011 7:09 PM
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