Central Falls to hold election after former mayor stung by fraud – chicagotribune.com

Dec 10 (Reuters) – Residents of formerly bankrupt Central
Falls, Rhode Island, will elect a new mayor on Tuesday after
former mayor Charles Moreau pleaded guilty to corruption
charges.
The election pits front runner James Diossa, a 28-year-old
who has been a city councilman since 2010, against former police
Chief Joseph Moran. The winner will serve out the remainder of
Moreau’s term.
Diossa won 59 percent of the vote in a special primary
election on Nov. 6, with Moran coming in second among five
contenders, with 18 percent of the vote.
A judge approved the impoverished city’s bankruptcy plan in
early September, setting the stage for it to emerge with a
budget balanced by slashing pensions, hiking taxes, revising
labor contracts and cutting employees.
The case garnered attention for its treatment of the city’s
bondholders, who emerged unscathed. The city went bankrupt
because of steep cuts in state aid, revenue shortfalls and an
unfunded liability of about $80 million for pension and retiree
health benefits.
Later in September, Moreau resigned and agreed to plead
guilty to a federal fraud charge for allegedly taking gifts from
his long-time friend and political supporter Michael
Bouthillette in exchange for contracts to board up foreclosed
houses.
Moreau is scheduled to be sentenced on Feb. 12.
As part of the approved bankruptcy plan, city officials must
enact a budget plan devised by the state receiver for the next
several years.

via Central Falls to hold election after former mayor stung by fraud – chicagotribune.com.

GoLocalProv | News | State Report: Rhode Island Pension Reform & Falling Off the Fiscal Cliff

This week, the State House Report primarily centers on the upcoming pension overhaul lawsuit. Not only will this week’s developments be covered, but also the origins of the contentious pension debate.

In addition to pension news, the looming “fiscal cliff” and a notable government appointment are also on the docket.  read more…

via GoLocalProv | News | State Report: Rhode Island Pension Reform & Falling Off the Fiscal Cliff.

GoLocalProv | News | Does Rhode Island’s Pension Reform Law have Any Hope of Survival?

Does Rhode Island’s Pension Reform Law have Any Hope of Survival?

Friday, December 07, 2012

With attorneys expected to ask a Superior Court judge to toss out a lawsuit challenging Rhode Island’s landmark pension overhaul, the state is bracing for the latest battle in a more-than yearlong scrum with its top public employee unions today.

At stake is a pension reform package signed into law last year by Governor Lincoln Chafee that cuts the state’s unfunded pension liability by $3 billion and is expected to save taxpayers nearly $300 million by next year. It also enrolls public employees in a 401k-style hybrid plan, freezes cost-of-living-adjustments (COLAs) and raises the retirement age for many union workers. The outcome of the suit could play a role in how states all over the country attempt to address massive unfunded pension liabilities.

In one corner, the state has brought in prominent New York lawyer David Boies (who represented former Presidential candidate Al Gore in the aftermath of the 2000 election with George W. Bush) to join a legal team that will defend the overhaul, which state leaders, including General Treasurer Gina Raimondo, have argued is in the best interest of all sides.

In the other corner are the public employee unions, which are prepared to argue that it was unconstitutional for the legislature to pass a law that altered guaranteed retirement benefits to their members.

Both sides enter the hearing following a week of discussion over whether all sides should sit down at the bargaining table to reach an agreement to avoid a lengthy –and costly— legal battle. Chafee said this week he favors negotiations.

“I have confidence in the state’s legal case,” Chafee said. “But a strong case does not guarantee a win. I am therefore reluctant to rely exclusively on the uncertain outcomes of litigation. The most prudent approach is to continue to aggressively press the state’s case in court while, at the same time, exploring reasonable settlement options that could yield favorable alternatives in the best interest of the taxpayers. Engaging in settlement discussions is a near-universal practice during high-stakes litigation.”

A Political War

Chafee took a backseat to Treasurer Raimondo last year as the pension reform law was crafted, but the two clashed over whether to include municipal pension in the overhaul and now, with Raimondo emerging as a potential challenger for Governor in 2014, the relationship has continued to sour. This week, Providence Mayor Angel Taveras, Cranston Mayor Allan Fung and former Auditor General Ernie Almonte –all potential gubernatorial candidates themselves— sided with Chafee when it comes to negotiating with the unions.

“I have been disappointed that state leaders in a position to engage in reasonable discussions have chosen not to do so,” Chafee said. “There is no harm in talking, but the consequences of failing to talk could be tremendous, in a case where a loss – in the Treasurer’s own words – would be a ‘fiscal calamity.’ It is my continued hope that other state leaders will join me in working to find common ground to protect the interests of Rhode Island taxpayers and the retirement security of all public employees.”

But Raimondo and other state leaders such as House Speaker Gordon Fox, have said the time for negotiating was last year. The Treasurer said she would be willing to sit down with all sides if Taft-Carter encourages such discussions to take place, but she remains opposed to “closed-door” meetings.

“I have great respect for the judicial system and we now must let this process unfold in an orderly and transparent way,” Raimondo said. “We owe that to the people of Rhode Island. It is not the time for closed-door meetings. This is not a time for politics. This is too important to the future of Rhode Island.”

In a statement this week, Fox agreed with Raimondo, noting that negotiations could have taken place last year.

“It is not appropriate for me to negotiate legislation that was passed by the General Assembly and signed by the Governor,” Fox said. “The time to negotiate was during the 30 hours of public hearings that were conducted by the legislature. We always anticipated that there would be a legal challenge to this comprehensive law. This law is critical to securing the state’s retirement system and placing Rhode Island on sound financial footing now and into the future. The matter is now in the hands of the judiciary, where it will be appropriately decided.”

Union Leader Compares Raimondo to Mitt Romney

The pension reform law requires that teachers, state employees and the state-administered municipal plans (MERS) wall be enrolled in a 401k-style hybrid plan that shifts the risk to the employee through combining the attributes of both the defined benefit and defined contribution plans. The law also institutes a proportional retirement eligibility structure for most employees between ages 59 and 67, depending in part on the employee’s current years of service. Those already eligible to retire as of June 30, 2012, would not have their eligibility to do so change.

Under the law, retirees would not lose COLAs granted prior to last July 1, but all future annual COLAs would be suspended until the aggregate funded ratio of the Employees’ Retirement System of Rhode Island, the Judicial Retirement Benefits Trust and the State Police Retirement Benefits Trust exceeds 80 percent.

But union leaders have argued that Raimondo and lawmakers rushed the pension reform law without taking the time for more negotiations. National Education Association government relations director Patrick Crowley said Raimondo has spent too much time celebrating then pension reform law.

“The Treasurer is looking more and more like Mitt Romney everyday – travelling around the country to meetings with big Wall Street donors talking about the ‘saving’ of Rhode Island, like Romney ‘saved’ the Olympics,” Crowley said. “It’s almost as if she has written off the working persons’ and labor vote, like Romney’s ’47 percent’ strategy. We all know how that ended.”

Judge has a Conflict

Still, others remain firmly in the Treasurer’s corner. Rhode Island Statewide Coalition executive director Donna Perry said throwing out the pension law would be devastating the state.

“This case will show whether the RI courts view a public sector pension as a sacred cow that’s above all else, including the fiscal survival of local governments,” Perry said. “An overturning of the law would produce a number of damaging scenarios that would take many communities to the brink of bankruptcy, and it’s hard to see how anyone wins from that.”

At the center of suit is Judge Sarah Taft-Carter, who has faced scrutiny for having family members who receive pensions and for being eligible for a pension herself. The state asked the Supreme Court to prevent Taft-Carter from hearing the case, but the high court said Thursday that she can preside.

Earlier this week, Perry and Ocean State Tea Party in Action President Lisa Blais released a statement suggesting Taft-Carter’s economic interest in the case presents too much of a conflict.

“The Judge’s character and work ethic are not in question, but what should be focused on is the clear language that sets forth when a judge should recuse themselves from particular cases,” Blais said.GoLocalProv | News | Does Rhode Island’s Pension Reform Law have Any Hope of Survival?.

Landmark pension reform faces legal challenge – The Brown Daily Herald – Serving the community daily since 1891

A lawsuit filed by several Rhode Island unions following state municipal pension reform last November goes before Superior Court Judge Sarah Taft-Carter tomorrow. The hearing provides Taft-Carter an opportunity to rule on a state motion to dismiss the case, which, if upheld, would be a major step toward solidifying the pension reform as state law. But if the judge strikes down the state’s motion, as most analysts expect, litigation will continue until the parties have expended all their options, including a possible appeal to the State Supreme Court. The process may continue for several months or until the parties negotiate an acceptable alternative settlement.

“It’s a nine-inning game,” said Scott Mackay, political analyst for Rhode Island Public Radio. “We’re in the second inning.”   read more…

via Landmark pension reform faces legal challenge – The Brown Daily Herald – Serving the community daily since 1891.

Cook County Pension Reform | Chicago Tonight | WTTW

How could Rhode Island’s pension reform efforts inform Cook County’s solution? Rhode Island Treasurer Gina Raimondo, the architect behind some of the country’s boldest pension reform, joins us with Cook County Commissioner Bridget Gainer on Chicago Tonight at 7:00 pm.

via Cook County Pension Reform | Chicago Tonight | WTTW.

Unions back RI governor’s call for pension talks – seattlepi.com

PROVIDENCE, R.I. (AP) — Public-sector unions on Tuesday hailed Gov. Lincoln Chafee’s call for negotiations to settle a closely watched lawsuit over Rhode Island’s landmark pension overhaul, but its main architect, the state treasurer, insists the dispute should be left to the courts.

J. Michael Downey, president of Rhode Island Council 94, said there’s still time to craft a compromise that prevents a protracted court battle. While there are no negotiations currently under way, Downey said, Chafee’s comments were a promising development in the contentious fight over public pensions.

“We have been — and are still — willing to come to some resolution rather than fight this through the courts for years,” Downey told The Associated Press.

The unions’ lawsuit has attracted national attention because it likely foreshadows similar battles elsewhere as states grapple with their own pension problems. On Friday, a judge will hear oral arguments on the state’s motion to dismiss the lawsuit.

On Monday, Chafee told WPRI-TV that the state should pursue negotiations to prevent a budgetary calamity if the overhaul is struck down.

“We’re the ones stuck with the bill if we fail in court and so we are the ones that really have the responsibility to pursue every avenue possible,” the independent governor said. “That includes negotiations to get this settled so we don’t fall into a deep, deep hole if the court case is adverse to us.”

Treasurer Gina Raimondo, a Democrat who championed the pension overhaul, wants to see the matter decided by the courts. Top lawmakers also remain supportive of the legislation, which Chafee signed into law a year ago. Raimondo noted that the pension law is already a compromise of sorts; lawmakers softened some provisions after hearing from public-sector unions during days of hearings on the bills.

“We have a strong case,” she said. “We have to let this process play out. It’s in the courts. I trust the courts. Let’s let it weave its way through.”

The law is designed to save billions of dollars in future years by suspending pension increases for years, raising retirement ages and creating a new retirement system that combines traditional pensions with 401(k)-like accounts. The changes, which went into effect July 1, affect active and retired state workers, teachers and those municipal employees covered by the state’s pension system.

When the law was passed, supporters — notably Chafee and Raimondo — argued that without significant action, rising pension costs would swamp state finances, putting funds for education, roads and future retirement benefits at risk. Before Rhode Island’s reforms passed, its pension costs were set to jump from $319 million in 2011 to $765 million in 2015 and $1.3 billion in 2028. The state’s annual budget is $7 billion.

Workers and retirees accused state leaders of reneging on promised benefits and urged Chafee and the General Assembly to negotiate an alternative to the proposal.

“This was shoved down people’s throats,” said Bob Walsh, executive director of the National Education Association Rhode Island. “This can be resolved through real conversation.”

Any compromise that is worked out between Chafee, unions and lawmakers could be considered by the General Assembly when it convenes next month, Walsh said. He said it’s too soon to say what form a compromise might take — pension increases, retirement ages and types of benefit plans could all be part of the discussion.

Top lawmakers, however, remain supportive of the law as written. House Speaker Gordon Fox, D-Providence, said in a statement that he was “extremely proud” of the process that led to the overhaul.

“After months of review, which included 30 hours of open public testimony, we enacted a bill that we believe will withstand the challenge currently pending in our courts,” he said.

Chafee spokeswoman Chris Hunsinger said she was unaware of any plans by Chafee to begin negotiations with union leaders. She said Chafee remains confident about the state’s chances of prevailing but is open to considering ways to stabilize the pension system without a long and uncertain court battle.

“I’m not sure what the perfect time for negotiation would be, but I do know it’s never too late,” she said.

via Unions back RI governor’s call for pension talks – seattlepi.com.

Chafee: let’s negotiate pension reform | Target 12 | WPRI.com

PROVIDENCE, R.I. (WPRI) – Gov. Lincoln Chafee is calling for both sides in the state pension reform lawsuit to come to the table and negotiate even as the case moves through the courts.

“In any litigation it’s common practice to have negotiations,” Chafee said. “I’m in favor of that: of having negotiation as litigation goes forward.”

Chafee made the comments days before a Superior Court hearing where Judge Sarah Taft-Carter will consider arguments on the state’s motion to dismiss a union lawsuit challenging the pension law, which Chafee signed into law last fall.

“We’re the ones stuck with the bill if we fail in court and so we are the ones that really have the responsibility to pursue every avenue possible. That’s fair to the taxpayer,” Chafee said. “That includes negotiations to get this settled so we don’t fall into a deep, deep hole if the court case is adverse to us.”

Nesi’s Notes: In-depth pension coverage

Union leader Robert Walsh – executive director of the National Education Association Rhode Island – applauded the governor’s comments, saying the court process will likely take up years and dominate every budget discussion during that time.

“I think [negotiations are] the only way we are going to get the pension situation solved permanently,” Walsh said. “We think we’re going to win in court, but that … we are going to be back doing this again.”

Walsh said the unions’ argument is that there were “more reasonable alternatives” the state could have taken besides enacting the pension reform law.

In the past General Treasurer Gina Raimondo has expressed confidence that the state will prevail, and House Speaker Gordon Fox released a statement Monday that seemed to give the thumbs-down to negotiations.

“After months of review, which included 30 hours of open public testimony, we enacted a bill that we believe will withstand the challenge currently pending in our courts,” Fox said in the statement.

“Thirty hours? That’s nothing,” Walsh responded. “The treasurer has not shown openness … I realize there are political considerations.”

Raimondo is believed to be considering a run for governor in 2014.

Walsh took issue with Raimondo’s national attention for the pension changes in Rhode Island. She has given several talks on the law and appeared on national television  discussing it.

“It’s really not a true story because they suggest we were at the table bargaining with them,” Walsh said. “No we were not; this was imposed upon us.”

The law enacted last November is aimed at saving billions of dollars by suspending retirees’ cost-of-living adjustments (COLAs) until the pension system is 80% funded and moving most current employees into a hybrid pension plan. The changes took effect on July 1.

Raimondo was in Washington, D.C., on Monday to attend a forum at the Brookings Institute and was not available for an interview. But in April, she warned that the impact on Rhode Island would be “devastating” if a judge throws out the law.

“If that law is repealed the municipalities will have to find $100 million next year alone,” she said. “You will see devastation, I believe, in municipalities not being able to pay those bills.”

It’s widely believed the case will end up in the hands of the R.I. Supreme Court.

via Chafee: let’s negotiate pension reform | Target 12 | WPRI.com.