Recent scenes of jubilation at the Statehouse notwithstanding, real victory in the battle over pension reform won’t be decided until a judge declares a winner.
Even before lawmakers recently passed a sweeping overhaul of the state’s retirement system, lawyers and operatives on both sides of the pension issue have been honing and testing their legal arguments on the matter for years.
Now that the legislative process has run its course, a court case filed the last time lawmakers made changes to the state retirement system returns to the spotlight, while reform advocates await a fresh legal challenge to the new pension law promised by unions.
Created with a keen awareness for the legal challenges ahead, the new pension law casts the pension changes as “emergency” measures, makes a point of asking for sacrifices from all stakeholders and suspends annual cost-of-living adjustments – or COLA – only until plans are 80 percent funded.
The changes are designed to cut $3 billion in unfunded pension liabilities by scaling back benefits for state employees, teachers and municipal workers.
The reform bill, signed into law Nov. 18 by Gov. Lincoln D. Chafee, is projected to save the state $275 million in next year’s budget and several billion dollars over the next decade.
The suspension of COLAs is seen by unions as an unfair reduction in previously approved benefits.
“This is the first time in our state benefit reductions have happened to people who are retired,” Rhode Island AFL-CIO President George Nee told the Greater of Providence Chamber of Commerce the morning after the initial pension-reform bill was released to the public. “I expect the final disposition will end up in court.”
Roger Williams University Law Professor Michael Yelnosky expects the new bill will produce its own court case, one that, even if it moves through the Rhode Island court system, will be watched closely throughout the country.
“Assuming they don’t go to federal [court, the potential case] will have no binding impact, but it could be influential to other courts,” Yelnosky said. “Judges will be seeing this is what Rhode Island did and we are either persuaded by it or not. Being first means the resolution probably will have more influence.”
Estate and Corporate Income Taxes are changing next year, and business owners and executives should know the details. The PBN Summit on November 6th will provide those details and more - including how much Obamacare's Employer Mandate could cost.
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