Jackson Jambalaya

WPRI reports pension costs are breaking Providence, Rhode Island:

"Rhode Island's capital city will be in bankruptcy by June if it doesn't get help resolving its financial crisis.

That was the dire warning from Providence Mayor Angel Taveras during a Thursday morning news conference at City Hall. With five months left before the end of the fiscal year and the capital set to run out of cash by the start of summer, the city still faces a roughly $30 million deficit in its budget for this fiscal year, which ends June 30.

The budget shortfall was projected at $110 million last March, when Taveras declared a "category five" financial emergency in Providence. It was reduced after he negotiated new contracts with unions, laid off workers, cut spending and won increased state aid...

Taveras said the city's retirees must accept reduced pension and health care benefits to save the city from financial ruin. A decree signed in 1991 by Mayor Buddy Cianci pushed the city's pension liability "into the stratosphere" by giving annual cost-of-living increases of 5% and 6% to more than 600 retirees, he said.

"These retirees have refused to sacrifice and are costing Providence taxpayers tens of millions of dollars a year," Taveras said, calling the increases "raises," not adjustments to keep up with the cost of living. The mayor will hold a meeting with retirees on March 3 where they will be asked for concessions.

Taveras's office released a list showing that the city's highest-paid pensioner, former Fire Chief Gilbert McLaughlin, now receives an annual pension of $196,813 a year. He retired with an annual salary of $63,510. At the current rate of growth, McLaughlin's pension will total roughly $796,871 if he lives to the age of 100."

Yes, you read that last paragraph right. Keep reading. A Jim Hood wannabe judge stuck her nose into this mess:

"Thursday's event was sparked by a Superior Court Judge Sarah Taft-Carter's ruling Monday in which she sided with retirees and blocked the city from forcing its retired police and firefighters to sign up for Medicare. The judge dismissed the $6 million cost of her decision as “alleged savings” that “would not save the city from financial ruin."

Taft-Carter's ruling "has pushed the city to the brink of bankruptcy," Taveras said. "Everything is on the table." The city will appeal her decision to the Rhode Island Supreme Court on Thursday and ask the high-court justices for an expedited review." Article

It is true the state did cut aid to the city but lets deal with reality here- paying someone nearly $200,000 a year when he didn't make even $100,000 while working is just plain nuts. Mish calculated on his blog:

"At 6% per year, it would take about 24 years to grow to a benefit of $196,813 a year to $796,882.97. Thus I conclude McLaughlin is 76 years old. If he lives another 10 years, his annual pension would be $352,462.11 based on an career ending salary of a mere $63,510..." Post