PENSION REFORM

Providence breaks $700,000 pension link joining nationwide insolvency fight

PBN FILE PHOTO/FRANK MULLIN
ANGEL TAVERAS speaks about his first year as Mayor of Providence, Rhode Island, January 23, 2012.
Posted 5/24/12

BOSTON - It has been more than 20 years since Gilbert McLaughlin ran the fire department in Providence. Yet the former chief stands to be biggest loser as the capital of the smallest U.S. state flirts with insolvency.

McLaughlin, 75, is the highest paid of Providence’s 3,000 retired workers, collecting a $196,813 pension this year, the result of yearly 6 percent cost-of-living increases the city once bestowed on firefighters and police. Lawmakers, facing a $1 billion deficit and squeezed for cash, ended the automatic raises and capped annual payouts.

Now retirees such as Gillie, as he is known, won’t see their pay outs double every 12 years.

“No one ever did the math on this,” Paul Doughty, head of the firefighters union, said in an interview in his office above the bar at the Firefighters Memorial Hall in Providence. “I don’t think anyone had any idea that if Gillie lived to 100, he’d be making $700,000.”

While a Providence official in 1989 warned such giveaways could one day bankrupt the city, the arrangement bought peace with labor unions, a compromise made in town halls and state capitals across the country after stock market gains fattened pension funds. Now lawmakers are trying to rein in benefits.

Since 2009, more than 40 states have lifted retirement ages, cut automatic raises, or increased employee contributions, typically targeting new workers to avoid conflicts with laws or contracts.

Broken Promises

It took the longest recession since World War II and a financial calamity that the U.S. Census Bureau says wiped out 23 percent of public retirement plan assets in 2009 to show how politicians long promised richer benefits without setting aside sufficient funds. The average retirement system in 2011 had about 75 percent of the assets needed to meet commitments, down from about 100 percent in 2000 amid the technology stock boom, according to the Boston College Center for Retirement Research.

“It is an inherently dysfunctional system,” said Steven Malanga, a senior fellow at the Manhattan Institute for Policy Research, a New York-based nonprofit that tries to foster individual responsibility and economic choice.

“It allows politicians to make promises that they will not be responsible for,” Malanga said. “That is why so many perks were granted to workers for political support that did not have an immediate impact on the budget.”

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WWjayceesKC@aol.com

The problem is the entire pension apparatus has to be restructured ... (they) have been too generous in comparison to other system[s] .. let alone the private sector.

There are ways to allow our state and municipal employees and retirees (and disabled workers) fair, balanced and affordable post-employment benefits that would not literally bankrupt the state and local governments, allow those entities to fund their day-to-day operations (without extraordinary debt obligations for non-productive services) and to ultimately provide more efficient and effective delivery of diverse governmental products to its aggregate citizenry.

To note, from all economic case studies and tax analysis, 'Property Taxes' are too 'regressive' to fund an entire local system and other creative means must now be employed.

Transitional tax programs and modifications of governmental procedures must be demonstrated for the overall good of the entire governing process.

These changes should of been made back in the late 1970's & 1980's to set the tone for state and local infrastructure development, vital maintenance projects and other eco-friendly initiatives that have to be properly incorporated into the mix of doing the business (fixed costs) of state and local government.

Dating the past several years, the federal government in taking the lead with unbalanced tax expenditures, military over-runs, non-effective rebates, poor accounting practices with off-budget expenditures (i.e., Social Security System), lack of reviews with banking regulations, weak housing programming ... on a 'fiscal' policy note - not to mention the 'monetary' policy of the convoluted Federal Reserve (currency costs) and uncertain trade markets (globally / domestic) with the underlying fissure of necessary health care needs and expense containment - all contribute to a slow economic recovery, a stifling of investments (individual and commercial), dulling the growth in productivity and thwarting the stabilization of employment attainment.

Such basic civic issues and citizen governance, must be weighted responsibly among the equilibrium of our elected officialdom, active special interests and the across the board allocation of government assets and equity.

It now appears we as average law-abiding citizens, must be conscripted to the next level of making sound and thoughtful decisions with our tri-level bureaucrat, that can makes a steady and upward resurgence of some version of economic tranquility until the next crisis of mammoth proportion falls upon us with readiness in such an unpredictable world.

WE ALL MUST COOPERATE, COOLABORATE & CALIBRATE TO S A V E THE SYSTEM WE CHERISH IN A GENERATIONAL WAY!!

Tuesday, May 29, 2012 | Report this
WWjayceesKC@aol.com

The problem is the entire pension apparatus has to be restructured ... (they) have been too generous in comparison to other system[s] .. let alone the private sector to have a modest rate of sustainability.

There are ways to allow our state and municipal employees and retirees (and disabled workers) fair, balanced and affordable post-employment benefits that would not literally bankrupt the state and local governments, allow those entities to fund their day-to-day operations (without extraordinary debt obligations for non-productive services) and to ultimately provide more efficient and effective delivery of diverse governmental products to its aggregate citizenry.

To note, from all economic case studies and tax analyses, 'Property Taxes' are too 'regressive' to fund an entire local system and other creative means must now be employed.

Transitional tax programs and modifications of governmental procedures must be demonstrated for the overall good of the entire governing process.

These changes should of been made back in the late 1970's & 1980's to set the tone for state and local infrastructure development, vital maintenance projects and other eco-friendly initiatives that have to be properly incorporated into the mix of doing the business (fixed costs) of state and local government.

Dating the past several years, the federal government in taking the lead with unbalanced tax expenditures, military over-runs, non-effective rebates, poor accounting practices with off-budget expenditures (i.e., Social Security System), lack of reviews with banking regulations, weak housing programming ... on a 'fiscal' policy note - not to mention the 'monetary' policy of the convoluted Federal Reserve (currency costs) and uncertain trade markets (globally / domestic) with the underlying fissure of necessary health care needs and expense containment - all contribute to a slow economic recovery, a stifling of investments (individual and commercial), dulling the growth in productivity and thwarting the stabilization of employment attainment.

Such basic civic issues and citizen governance, must be weighted responsibly among the equilibrium of our elected officialdom, active special interests and the across the board allocation of government assets and equity.

It now appears we as average law-abiding citizens, must be conscripted to the next level of making sound and thoughtful decisions with our tri-level bureaucracy, that can makes a steady and upward resurgence of some version of economic tranquility until the next crisis of mammoth proportion falls upon us with readiness in such an unpredictable world.

WE ALL MUST COOPERATE, COLLABORATE & CALIBRATE TO S A V E THE SYSTEM WE CHERISH IN A GENERATIONAL WAY!!

Tuesday, May 29, 2012 | Report this
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