September 16, 2014
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Mediation looks to be step on way to court
John Hazen White, Jr.

Superior Court Judge Sarah Taft-Carter has forced the state to go into federal mediation with the public employee unions over the terms of the landmark pension reform law. Both sides will now meet and the unions will be pressing to claw back some of the changes that the General Assembly approved last fall. Don’t expect much to come of the mediation attempt, however. The state and the unions will probably still be going to trial come February.

Why? Because any concession the state might consider will upset the financial structure of the reforms in place and cost millions. So the state will balk on conceding much of anything to the unions, which will mean the mediation effort will fail and the two sides will have no choice but to head into court, which is precisely where this case should be settled. In court, the state has a strong case to make.

To bring us up to date on the judge’s decision, a bit of background is in order. The public sector unions have taken the state to court over the landmark pension reform legislation, which was entirely expected. The pension law altered some of the pay and retirement benefits stipulations contained within existing contracts between the unions and the state; retirement eligibility ages were raised, younger workers saw the introduction of 401(k) plans for part of their retirement savings, and COLAs were eliminated for a period of 10 years. These sweeping actions were taken because the state faced an unsustainable pension nightmare; with more and more tax dollars every year feeding exponentially rising pension demands. If nothing was done, the state would go bankrupt.

To its credit, the Democratic-controlled General Assembly responded to the mountain of data and analysis presented by General Treasurer Gina Raimondo and voted overwhelmingly in favor of the reform plan that she presented, and Governor Chafee, who had courted and received critical union support in winning a three-way gubernatorial race, backed her. The reform law is saving Rhode Island millions of dollars each year while strengthening the pension system for the long haul.

While politicians voted for the plan, the unions did not. Their offered solutions to fix the pension problem was to raise taxes and refinance the pension system over the next 20 years, a move that was estimated to cost the state a billion dollars. As soon as the pension reform law passed, their leaders vowed to meet the state in court, which brings us to the present. They are arguing that promises in collective bargaining agreements made with the state over the years contain an implied contract, and breaching that contract over the objections of the unions is illegal.

Governor Chafee has not been helpful to the state’s case. Having backed the Raimondo pension reform plan and signed the legislation into law, the governor surprised everyone when he said that the state would be better served by sitting down and negotiating a settlement with the unions, in the manner of most civil law cases that get settled before they ever go to court. But this is hardly a typical civil law case. Like a nervous Nellie, the governor is afraid of the state losing the case. Or is he more concerned at this point with currying union favor for the next election?

The fact is, the state can’t afford to give anything back right now or for some years to come. As Gina Raimondo understands better than anyone, altering the terms set into the law would be a calamity, potentially bankrupting the state. Thankfully, legislative leaders understand this too, despite the pressure this puts upon them.

Let the case proceed in Superior Court. It will go up to the Supreme Court next, regardless of which side wins in the first round. Now is not the time to panic. Let’s keep calm and carry on, fortified by a legally sound case that will prevail in the end.


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