September 23, 2014
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Lookout
Thankfully, Providence appears to have eluded bankruptcy for now
John Hazen White Jr.

In thinking about this column for today, I was preparing to address the issue of looming bankruptcy for Providence, as everything I have seen and heard of late about Mayor Taveras’ attempts to close down the $20-plus million gap by June was not entirely encouraging. In recent weeks, we’ve heard about the Brown University payment deal and then Lifespan’s commitment – positive developments to be sure but not enough.

In between those items of good news was the not-so-good news that the city’s day in Superior Court regarding the Medicare lawsuit (an attempt by the city to move its retirees’ health care insurance from Blue Cross to Medicare) was being postponed, thereby bumping up very close to being too late to save the budget and with no guarantee that the city would prevail this time around. And while the Providence City Council has voted to suspend COLAs, capping pensions and scaling back disability payments by a third, those developments were simply a matter of “see you in court” by the affected unions and retirees.

Now it looks as if the General Assembly may not back Governor Chafee’s proposals to impose state law on these types of changes to allow individual communities under severe pension strain to at least have state authorization to do so, making the Providence move even riskier from a legal standpoint.

But then I got an unexpected call from Mayor Taveras himself, informing me that he had reached a sweeping, last-minute agreement with his unions and retirees that would avert a financial collapse. As reported, the mayor and the unions have agreed to halt COLA payments for a decade while guaranteeing that the city will make its full yearly payments into the funds to restore their health for the future.

The switch from the so-called “Cadillac” health care plan with Blue Cross over to the “Buick” coverage provided by Medicare is also part of the agreement. Taken together, the two union concessions will save the city some $18 million next year. Also taken off the table was the certainty of expensive litigation to both sides.

Much has been made of what happened in Central Falls when it fell into bankruptcy, drastically driving down pension payments to retirees, so half a loaf became a lot more appealing to the Providence unions when faced with the prospect of much the same happening to them. That was the smart call by union leaders like Paul Dougherty of the Providence firefighters union. They have demonstrated commendable flexibility in recent years, especially since Angel Taveras became mayor. One only has to look back to the firefighters’ decade of battles with Mayors Cianci and Cicilline to see how far they have come.

Now, in doing so, it is the city’s responsibility to do right by them as things go forward. Refreshing also was the shared acceptance that both sides were to blame for allowing the pension situation to get to such a cliff in the first place.

Of course the agreements have to be ratified by the active union rank and file and the retirees. Again, the union folks and the retirees will look to Central Falls, take a deep breath, and hopefully vote in favor.

And there is more work to be done to fully restore the capital city’s financial health and well-being, a battle all the more difficult as the Ocean State continues to struggle with the Great Recession. But having our capital city escape bankruptcy will be a major victory, even as a dark cloud of uncertainty continues to hang over the state. Hats off to Mayor Taveras, and thanks for the call.


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