Some Retirees Object to Pension Deal

The City Council's Finance Committee took the first step towards implementing a pension overhaul Thursday night, approving a package of ordinances that Cranston Mayor Allan W. Fung proposed last year to reign in costs and freeze cost of living adjustments for active and retired police offices and firefighters.

The next step: court. That's because the ordinances do not reflect the landmark pension deal announced earlier this week between the city and union officials. Both sides are expected to hammer out the details of the agreement before a judge who ultimately will approve or reject the deal.

Although union officials said at Monday's press conference that the new agreement, which is expected to save $6.7 million in the next fiscal year and tens of millions over the next few decades, has unanimous active-member support, not every pensioner is happy with the arrangement.

At Thursday's meeting, a lawyer representing a number of retirees, Patrick Sullivan, said the city could be facing a lawsuit filed by several retired city employees who aren't happy with the deal.

Sullivan said he represents nearly two dozen retirees and told the committee that legal precedent is on his side. His argument was similar to one posed by lawyer James E. Kelleher in November, who said he also represents a group of retirees and if the council acts, Kelleher warned, retirees would seek a Superior Court injunction ruling the City Council was in violation of a court order based on Judge Daniel Procaccini's ruling about 10 years ago that states any change to retiree benefits must be accompanied by collective bargaining.

Kelleher said that the City Council's lawyers would likely tell them there is actually a legal route the city could take to change benefits without negotiations based on a set of Supreme Court rulings known as "public purpose," which gives municipalities the ability to break contracts or make unilateral decisions in emergency situations.

"Here, nothing could be further from the truth," Kelleher said. "If the city of New Orleans makes arrangements with its unions then a hurricane comes in and annihilates the city and removes 80 percent of its citizens, that's something that nobody could have foreseen. It was in no one's contemplation when they made the collective bargaining agreement."

But the city's local pension plan, even if it's in critical status, is "nothing new," Kelleher said. "This body has been discussing the financial burdens and financial problems regarding the city pension system at least since the 1990s."

In an interview, City Council President John E. Lanni Jr. said the complaints from retirees seems unreasonable since the average pension is $50,000 per year plus about $18,000 in benefits.

"The average family in Cranston doesn't make that kind of money," Lanni said. "I think we're being fair."

Lanni said the pension deal, which caps, freezes and reduces COLAs over the next decade and a few years after that, is "a fair compromise" and not so much of a burden when other families have no pensions and would "dream" of having $50,000 annual income in retirement.

"The bottom line is we're facing a $300 million hole and it can't just be plugged," Lanni said. "You can point all the blame you want at past administrations and ask why they gave away these kinds of benefits, but it has got to be corrected."

The city's Finance Department said that if the city were to make the extra $6.7 million payment to the pension plan next year (the same amount saved under the new agreement), taxpayers would see an increase of .92 per $1,000 of assessed value next year and commercial properties would go up $1.50 per $1,000. 

In addition, the city could be facing bankruptcy in 10 years.

"We're just coming out of a recession here and people are just getting back on their feet," Lanni said. "To hit them with a 92 cent tax increase would be irresponsible on our part."