05/17/12 – Committee on Finance

051712-senatefinance-featured

4:40 p.m.
Anybody rushing to get to the State House for a “rise of the Senate” committee meaning can relax. At 4:40, the floor session has just begun.

4:57 p.m.
The Senate is already a few bills in. At the beginning, Sen. Metts introduced some basketball players from Central High. It was interesting (and very Rhode Island) to hear him detail his connections to several of the players. He played with one’s grandfather. He had connections with another’s family from his time as a coach. His wife had taught the current coach.

It’s worth reminding people that Providence is a city, not a small town, because it’s easy to forget that.

5:01 p.m.
Debate has begun on Sen. Sosnowski’s bill to have police officers give smoking drivers a verbal warning about the hazards of smoke to children in the car. So far, Sen. Shibley has spoken against the nanny-statism of the bill, calling out Sen. Kettle for drinking soda (which is unhealthy, too, he said).

Sen. Hodgson is for the bill. Sen. Maher said he supported it in committee, but that he’s changed his mind for the reasons expressed by Shibley. Sen. Perry noted that no towns objected to the legislation in hearing.

Sen. Crowley spoke to her experience as a “reformed smoker,” citing harm to her own children for which she feels responsible.

5:19 p.m.
I decided to move over to the hearing room for Senate Finance (211) in order to get set up. One can really tell by the contrast with the corresponding House committee’s hearing room which one has the higher responsibility.

By the way, the smoking bill passed, so police who feel it is “appropriate” can chastise smoking parents verbally. I’m sure that will do wonders to change the behavior of people who are still smoking and still doing it in a closed car with their children.

5:30 p.m.
Ken Block is testifying on a bill that he originated (2883) that would create investment incentive for new businesses. He referred to 38 Studios as a model of what the state does not want; he wants private companies investing, not the state.

He says we want businesses that create jobs; we shouldn’t care so much about the tax revenue.

5:33 p.m.
Sen. Pichardo asked why there’s a three year time limit. Block said it’s to allow investors to set up businesses and leave if they want to (leaving the businesses and jobs intact).

5:36 p.m.
A representative of a chamber of commerce or other business association is testifying for the bill. He said the economy looks like it’s got encouraging signs (noting 11.1% unemployment).

5:38 p.m.
Diane McLaughlin is testifying that the Ocean State Tea Party in Action (OSTPA) supports any bill that will get RI out of the bottom of national rankings.

She asked if the provision for businesses headquartered in RI would prevent large national companies from investing here, but Block clarified that the bill affects income taxes, so that’s not an issue.

5:41 p.m.
Mike Puyana says RI Tea Party is for it. He started with a joke that following Ken Block on business matters is like following Ronald Reagan and Barack Obama in a speech-giving contest. (See, the Tea Party is bipartisan!)

5:43 p.m.
Held for further study. Next, a bill to allow tax-return donations to Waterfire.

5:48 p.m.
There’s a fiscal note predicting that the bill would cost $10,000 per year.

5:49 p.m.
Puyana, testifying on his own behalf, says that RI is on some list of “things to see” along with marvels of the world, because nobody else “anywhere” has anything like Waterfire.

5:51 p.m.
A representative of the city of Providence testified that she at first thought “great, now every nonprofit is going to want a check-off box on the tax form,” but they’ve decided that Waterfire is sufficiently unique to obviate that concern.

5:52 p.m.
Held for further study. Now on to S2955, bringing Central Falls retirees into MERS and setting up the state fiscal oversight program as a path into the system. It would also bring their retirements back up to 75% of their prior amount before bankruptcy changes.

Sen. Crowley, the sponsor, is testifying, describing that the firefighters and police officers have done all that they were instructed to do and have sacrificed time and health for their jobs.

“This bill will give them back their dignity.” Applause from apparent retirees in the room.

5:56 p.m.
A police union rep. who does not represent Central Falls, is testifying against the bill strictly on the grounds that it affects other municipalities, allowing them to enter MERS.

5:57 p.m.
There are probably a couple dozen retirees in the room, but the room is so small that it’s enough to fill it up.

5:58 p.m.
The union rep (Paul something) says he’s also speaking on behalf of fire union rep. Paul Valletta, who couldn’t be here.

5:59 p.m.
Diane McLaughlin says OSTPA opposes the bill on the grounds that it might set up a precedent for (essentially) state bailouts of pension programs.

“While there is a provision to withhold state aid to municipalities that don’t make their ARC payments, where is that money supposed to come from?”

“Municipalities must be forced to live within their means.”

6:01 p.m.
She says that perhaps the unions across the state should offer to subsidize the pensions for their “union brethren.”

6:03 p.m.
Bruce a police department retiree (president of a recently formed retirees’ association) is testifying for the bill. He noted several cuts, including the cancellation of life insurance, even for old and sickly retirees.

6:04 p.m.
By the way, I’m pretty sure that this bill only really affects the transition into MERS. It is article 28 in the budget that grants the money to bring the pensions up to 75% of their prior amounts.

However, the House variation of this bill, which doesn’t include the oversight path to MERS, does keep the pensions at 75% when the bankruptcy court settlement agreement expires in 2016.

6:09 p.m.
Another police officer (retired?) says that it bothers him that the only people not losing anything are the bondholders. “Invest money” and you get what you’re owed; “invest your life” and you get the shaft.

6:10 p.m.
He says he can’t afford his son’s soccer fees, anymore. When he finished, a long series of retirees respectfully passed. They just wanted to stand up and make their presence known.

One woman says her husband died 5 years ago, but she couldn’t continue speaking.

6:12 p.m.
Ken Block is testifying against the bill. He acknowledged that the Central Falls retirees have “gotten a raw deal.” He’s concerned about the provision to bring other struggling cities and towns into MERS.

He’s also concerned that there’s “no funding mechanism” to prevent mandates for pension payments from drawing resources from other city services or forcing tax increases. He asked what business would want to invest in the city knowing that a court could order taxes to increase “40%.”

“The vehicle for getting it done is miserable, in this case.” “This bill is an end run around the receiver process.”

He left as soon as he was done.

6:17 p.m.
A retired fire captain says he retired on disability after a building collapsed on him, causing serious injury. He says it’s criminal, the way they’re being treated. He says they shouldn’t be used as an example to force concessions from unions in other cities and towns.

[General note: the testimony for this bill, both in its delivery and its content, is probably the most compelling that I’ve heard.]

6:21 p.m.
Michael Long, retired police sergeant and an attorney protests that the bill doesn’t bring the retirees up to 75%.

He’s saying that bankruptcy has “flushed” decades of collective bargaining and more. He says the retirees are shouldering one-half of the burden of Central Falls financial problems.

6:22 p.m.
Long: just over 100 people are being asked to shoulder over $2 million per year of cuts.

6:23 p.m.
Dept. of Revenue director Rosemarie Booth Gallogly is testifying. She says her office drafted the legislation. “This would definitely change” the rules for entering into MERS.

She says that “because of these 55% reductions,” despite the 2% simple (non-compounding) COLAs provided for in the bill, “most of these people” will never get back to where they were before the cuts.

This would be a pay-as-you-go plan, because there are no assets.

6:27 p.m.
She said that the legislation has to include other cities and towns to get around city/town charter requirements. (I may have misunderstood what she said.)

“We have to think outside the box” with municipal retirement plans.

6:29 p.m.
She says she’d oppose an amendment to the bill bringing retirees up to 75% permanently because it could undo the finances of the city.

She also clarified that the COLA would only apply to the reduced pension, not the 75%, which (for the first five years) would be more like an annual stipend.

6:33 p.m.
Sen. Pichardo asked for clarification about why other municipalities are included. A Dir. of Revenue lawyer explained that the RI Constitution prevents the General Assembly from targeting legislation at a specific community. (That’s confusing, because obviously, the budget article gives money to Central Falls, specifically, and there are all sorts of bills that address individual cities and towns.)

6:37 p.m.
Sen. Lou DiPalma asked whether the receiver and assistant are still in the city. Gallogly said that they are, but on a reduced basis. DiPalma asked when they think the receivership will be over.

Gallogly said bankruptcy should be over in July, and the receiver team will be out before the end of the year.

DiPalma asked about the bill for the receivership process. The answer: $2.5 million. Some of the firemen scoffed and started talking. Michael Long made a noise to get their attention and sternly motioned for them to be quiet.

6:45 p.m.
Another retiree has offered compelling testimony that Central Falls unions have always been willing to offer concessions for a city that they know is in hard shape. “We were always the lowest paid. We were always the lowest staffed.” He says that’s why there are so many on disability.

“There are people in this room tonight that aren’t even going to have enough money to bury themselves.”

He moved to Central Falls in the ’80s because he worked there. He’s now left because he can no longer afford the taxes or his mortgage.

He says they tried year after year to see how the pensions were doing, but there was no transparency.

6:50 p.m.
The first retiree representative is back up to cite the poor management of money in the state. He also mentioned Receiver Robert Flanders’s performance at the Newspaper Guild Follies, mocking the cuts he’s made and promising to go on to do more.

Held for further study.

6:54 p.m.
Joe Moran (a chief and former state rep) is offering some lingering testimony. He says he retired and stayed on the job as chief. He was getting a $51,000 pension that was reduced to $22,000. Then the receiver eliminated his position. He’s been out of work since last September and is almost out of savings.

6:56 p.m.
Moran made a point about fiscal oversight, saying that under state supervision, the school system went from $11 million to $48 million now back to $40 million.

He says economic development is the only thing that can save Central Falls. He sort of alluded to 38 Studios, and a couple of chuckles from the audience illustrated the damage that that deal has done to the notion of government-sponsored ED in the state.

6:59 p.m.
Now on to other bills. There are no spectators in the room any longer but me.

7:01 p.m.
A bill regarding West Warwick tax issues was held and will be reposted.



  • So it sounds like Director Gallogly opposes the 75% provisions in the McLaughlin version of the bill, which makes me wonder who wrote it. All due respect, I'm guessing it wasn't Rep. McLaughlin himself.

  • Wasn't Moran the police chief who retired (on paper) so he could start collecting his pension at the same time he was still serving as chief of police (and drawing the full salary for that position)?

    His is one of the less compelling stories, but then his pointing fingers to lots of other fiscal mismanagement is representative of a certain RI mindset — money is taken from the taxpayers and spent by the government with no real rhyme or reason, and I just tried to get as much of it as I could get my hands on, 'cause that's the way life works.

  • justinkatz

    It's possible that Revenue still wrote the House bill, but somebody changed it along the way. Although the fact that it is specific to Central Falls suggests that a bureaucratic department with constitutional lawyers wasn't involved. The retirees have some lawyers among them, so perhaps they had a hand in it.

    And yes, Moran described how Central Falls just happens to be one of two (I think) unique municipalities in RI that allows retirees to continue working, drawing both a pension and a salary. It was (to paraphrase): "Hey, I didn't do anything anybody said I couldn't." His objection was that his pension was reduced 55% percent and then he lost his job, bringing him from six figures to $22,000 in income.

    He also noted that he wasn't among the 91% of retirees who signed on to the agreement, because he's suing.

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