The council sustained Mayor Scott Avedisian’s veto of an ordinance that would have required actuaries to determine annual contributions needed to fund health care for retirees.
As they did at the Sept. 10 meeting, the council voted 5-4 last Wednesday, only this time the measure failed, as a “yes” vote. At least six votes are required to override a veto. Council President Bruce Place, Ward 1 Councilman Steve Colantuono, Ward 6 Councilwoman Donna Travis and Ward 8 Councilman Ray Gallucci voted against the override.
In a phone interview with Place Friday afternoon, he said that while he agreed with some of Ward 9 Councilman Steven Merolla’s points, he voted against the ordinance because he finds it unnecessary, as the city already employs an actuarial firm, as well as the fact that a funding source was not named.
“We already get a written report and I see no reason to add an additional expense,” he said.
Nevertheless, Merolla tried to sway those four council members to vote in favor of the legislation.
“We have to make sure we are going in the right direction,” he said. “We have a fiduciary obligation to the taxpayers and to the employees to make sure these funds are solid. For those reasons, I would ask the people to override the veto to allow the actuaries to come before the council and discuss the issues with us and give us some advice.”
Merolla said it’s important to fund the pensions adequately, as opposed to relying on returns that are never going to come to fruition. Having the actuaries report to the council, he said, is in the best interest of the taxpayers, as well as employees who benefit from them.
“Knowledge is a good thing, not a bad thing,” Merolla said. “This doesn’t ask the actuaries to do anything different. It’s just to educate us.”
Ward 4 Councilman Joseph Solomon agreed and commended Merolla for drafting the legislation. He said the bill would have given the council the knowledge on how to proactively address the city’s financial problems.
“The tools are necessary for us to do the right thing on behalf of the taxpayers and the beneficiaries,” Solomon said. “This helps them – this is not against them.”
Further, Solomon said he finds it ironic that Avedisian in part has an issue with the ordinance because it lacks a fiscal note, as he said he asked the administration for a fiscal note when they awarded pensions to employees at a rate of 80 percent of what they were making without getting an actuary study. Also, Solomon said Avedisian didn’t look for a fiscal note for a no-bid health care contract with Blue Cross.
“Those were two fiscally irresponsible acts,” Solomon said. “Those were decisions that were shot from the hip that would have cost the taxpayers millions and millions of dollars had the council not stepped up to the plate and reversed them.”
Solomon and Merolla said they are concerned that Warwick will end up like Central Falls or other bankrupt municipalities if more attention is not given to the situation. The recurring theme in other communities, Merolla said, is that the government made promises that they didn’t – or weren’t able to – keep because they didn’t understand the severity of their debt.
“I don’t believe that it’s in the best interest of the employees and I don’t think it’s in the best interest of the taxpayers not to have dialogue with the people who make recommendations to us regarding the largest unfunded deficit in the history of Warwick,” Merolla said.
“The first issue in the mayor’s letter as to why he vetoed this was that there was no funding source. We’re talking about an unfunded $800 million debt. We didn’t have a funding source last year, and to me it’s common sense. I’m surprised he even raised the question of a funding source.”
In a letter sent to the Warwick Beacon on Sept. 14th, Avedisian stated that one of his main concerns with the ordinance was that a fiscal note or defined funding source was never identified or designated to support the legislation. He said he does not intend to “hire anyone or undertake anything that is not funded.”
Further, Avedisian noted that representatives from Jefferson Solutions, Inc., a company that assists government and municipal employers in getting answers to issues that impact accounting standards, visited Warwick in spring 2011 and attended a council meeting at which they gave a comprehensive overview of the city’s retiree health care status, costs and liabilities. He said the company recommended that the city continue its current practice of funding retiree health care costs in the annual budget.
“Jefferson Solutions cautioned that, because of the fluid nature of health care nationally, any proposed funding dedicated to a retiree health care trust could be in jeopardy of forfeiture or statutory funding obligations should legislation at the national level be enacted that is contrary to an existing program,” Avedisian wrote.
During a phone interview Friday morning with Mark Carruolo, the mayor’s chief of staff, Carruolo said the mayor vetoed the ordinance because Jefferson Solutions suggested the city avoid developing a plan.
“The ordinance is asking us to have our consultant do something that our consultant has advised us not to do,” Carruolo said.
Still, at the end of the meeting Merolla announced plans to fine-tune and re-docket the ordinance.