The mayors of the state’s three largest cities agreed Friday that pension reform must not only impact the benefits of current and future municipal employees, but also those who are retired.

“Some would say this is political suicide,” Providence Mayor Angel Taveras said, but he maintained that altering benefits to retirees is the only way to ease the burden on taxpayers and make a sustainable system.

Warwick Mayor Scott Avedisian and Cranston Mayor Allan Fung nodded as Taveras spoke at a forum run by Leadership Rhode Island, held at the Providence Journal and hosted by Fidelity Investments. All three mayors similarly agreed that adjusting existing benefits, referred to as “vested property,” is untested and would be challenged in the courts.

“Until that’s decided,” Avedisian said, “we’re going around in circles.”

“We need predictability…it needs to be affordable to the taxpayers,” Fung said, near the end of the 90-minute discussion attended by the 2011 class of Leadership Rhode Island and about 100 business and non-profit leaders.

“It’s a huge issue. The numbers are huge,” Taveras said, citing an unfunded liability of $820 million. On top of that, he projected a $1.5 billion liability for health care promised by the city for current and future retirees, of which only $1 million has been “put away.”

Taveras put the blame on built-in cost of living adjustments [COLAs] that have increased some pension benefits to the point where they exceed what a worker was paid while on the job, the failure of administrations to sufficiently fund pensions and lower than projected investment returns.

Of Providence’s $614 million budget, Taveras said $119 million would be spent on pension and health care benefits. The numbers only get bigger next year and the year after. Although Tavares has been able to balance the current budget through layoffs and renegotiated contracts he said, “Unless we address pensions, we will be back in a situation like this shortly.”

“As goes Providence, so goes the state of Rhode Island,” said Taveras.

Taveras’ colleagues concurred.

“If you don’t fix the pension problem for our cities, there goes the state,” said Fung.

Using the calculator on his cell phone as Taveras spoke, Fung said that as bad as conditions are in Providence, with 19 cents of every budget dollar paying for pension benefits, Cranston is carrying a heavier burden at 24 cents.

“A crushing debt,” Fung said, projecting the cost would soon escalate to 30 cents of each budget dollar. “Next year is going to be devastating to the residents of Cranston if we don’t find a solution now.”

To fund pension costs, Fung said the city would have to raise the tax levy by 8 percent next year – twice the level of the cap set by state law – and “it’s not sustainable.”

“You can’t keep putting it [benefit costs] on the backs of current employees,” Fung said, “Comprehensive reform is the only fair solution.”

Avedisian didn’t paint as dire a picture in Warwick, noting that both Police and Fire II and municipal employee retirement plans are funded at levels ranging from 71 to 98 percent. That’s not the case of Police and Fire I plans. Overall he put the city’s unfunded liability at $210 million, but he noted that since the administration of Joseph Walsh in the 70s, the city has recognized the looming problem and made pension allocations annually.

He said the biggest issue faced by Warwick is the cost of living adjustments built into the police and fire plans.

Also, noting that some public sector employees who have worked for different municipalities and the state are getting two and three pensions, Avedisian suggested portable pension benefits. Under his plan workers would pay into and collect a single pension.

Yet Avedisian questions the fairness of a single state plan that would meld the existing plans of cities and towns. His point is that Warwick, which has been responsible in funding its pension plans, would be picking up a portion of the tab of municipalities that have neglected to pay.

“If you put us all into the same mix, what is the incentive?” Avedisian asked.

As it is, he has issues with the state Municipal Employees Retirement System [MERS] that teachers are members of. The state increased municipal contributions to the system by 2 percent this year to 13 percent. Next year the projection is for contributions to top 20 percent.

In Warwick’s case, contributions increased $1.5 million this year and would go up another $5.3 million next year. The increase in Warwick teacher pension payments alone would exceed the city’s ability to increase taxes if all other factors remain constant.

This is an issue Avedisian has addressed with General Treasurer Gina Raimondo as she and an advisory committee examine possible reforms in preparation for a special session of the General Assembly this October. The panel held its second meeting yesterday at the Warwick Public Library.

On Friday, the three mayors said a series of factors have created rich contracts for municipal employees. They noted that, at one time, pension and health care benefits were a means of offsetting lower pay. Fung said municipal leaders are often not prepared to negotiate and lack the flexibility and institutional knowledge. Avedisian said municipalities are at a disadvantage in that often they don’t have the expertise and that unions have a practice of seeking to play off each other, pushing demands higher and higher.

In Warwick’s case, where the teacher contract expires this year and municipal contracts in 2012, Avedisian said, “Whatever is decided for the teachers, the others are going to want…it sets the stage for next year.”

Avedisian called for uniformity.

The mayors also agreed what happens in Central Falls is critical to the state and municipalities. Should the municipality default, the consensus was that it would have a ripple effect on municipal and state bond ratings thereby driving costs even higher.