When confronted by a $7.3 billion unfunded pension liability for state-employee retirement plans, General Treasurer Gina M. Raimondo and the General Assembly did the hard work of holding hearings, digging into the numbers, asking questions, and after 11 months, passing the Rhode Island Retirement Security Act of 2011, which Gov. Lincoln D. Chafee then signed into law.
The pension reform was not perfect. Reports at the time said the reform would shave $3 billion from the $7.3 billion overhang. A significant amount, yes, but not even half of what the state still needed to come to terms with.
Now, in opening the door to negotiating a settlement to the public-employee unions’ and retirees’ suit against the reform, Gov. Chafee runs the risk of undermining one of the most important economic-development initiatives undertaken by Rhode Island in recent memory.
The unfunded liability is not just a number. It is a real drag on the state’s economy. Even now, if continuing reforms are not undertaken, the shortfall threatens to sap an ever-increasing share of state resources and with it the ability of state government to meet even its most basic obligations, be they supporting nonprofits serving the poor and underprivileged or developing programs to help the state’s small businesses thrive.
Using the language of reasonableness, the governor said in a statement that the “most prudent approach” would be to explore “reasonable settlement options that could yield favorable alternatives in the best interest of the taxpayers.”
The problem is that reasonableness was already demonstrated during the time spent researching, writing, passing and signing the reform into law. There is no going back, especially given that the reform work is not done, and the most favorable alternative for the taxpayers is already law. •