[The following was received via e-mail. Bill Murphy can be contacted at wjmurphy2@yahoo.com]

Concerned Citizen Seeks to Testify about Unfairness of Pension Settlement to Taxpayers at Court Hearing Tuesday, Schedules Press Conference to Explain Request to the Public

Concerned citizen Dr. William J. Murphy will hold a press conference in front of the Frank Licht Judicial Complex at 250 Benefit Street in Providence at 4:30 PM on Tuesday, May 26, 2015 to explain to the public the reasons for his request to testify about the unfairness of the pension settlement to taxpayers at the ongoing fairness hearings in Superior Court. Dr. Murphy will deliver a statement emphasizing that the terms of the settlement itself as well as the impropriety of the court-supervised secret negotiation process that produced it have significantly harmed the financial welfare of taxpayers, violated the political rights of citizens, and severely damaged the public interest.

(EAST PROVIDENCE, RI – May 25, 2015) – Dr. William J. Murphy, a concerned resident of East Providence, has petitioned the Rhode Island Superior Court to testify at the ongoing pension settlement fairness hearing Tuesday. He held a press conference at Superior Court in Providence on Tuesday to issue a statement explaining the reasons for his request.

Dr. Murphy opened his remarks by saying that, “The pension settlement is grossly unfair to good citizens of Rhode Island because it adds over $290 million to the unfunded pension debt that the state’s already overburdened taxpayers cannot afford. Even more troubling, the terms of the settlement itself as well as everything about the nature of the process itself fail to demonstrate appropriate sensitivity to the economic hardships this increased tax burden would impose on elderly citizens living on fixed incomes as well as low-income younger taxpayers and their families who remain deprived of adequate economic opportunities in part because of the unaffordable state pension system, the high rates of taxation imposed to feed it, and the resulting negative consequences for the Ocean State’s economic competitiveness. The preoccupation with the effects of the pension settlement on politically powerful and influential public sector workers who will retain first class pension benefits not available to the overwhelming majority of private sector workers leaves the voices of the less fortunate unheard and their interests uncared for.”

Murphy also said that “The settlement is also fundamentally unjust because it perpetuates the economically unjust great disparity in retirement security between government employees and private sector workers. The vast majority of private sector workers do not have pension plans and fewer than half have any type of retirement plan at all.[1] Of those private sector workers lucky enough to have a 401K defined contribution retirement plan at work, the average amount their employers contribute to their plans is 4.5 percent annually.[2] These same private sector workers pay taxes that support contributions to the pensions of state workers of nearly 24 percent of their annual salaries or more than 5 times the amounts paid into their plans by their employers.[3] The high tax burden of financing government pensions is one major reason why private sector employers and employees can’t afford to fund adequate retirement benefits for themselves. These disparities are highlighted all the more when one considers the relatively unfavorable position of private sector workers reliant on Social Security, a program that offers relatively meager benefits,[4] is significantly underfunded[5], whose benefit levels are not contractually guaranteed and can be changed at any time, and in which taxpayers have no ownership or property right to their contributions.

Murphy continued, “The most devastating financial consequence of all for taxpayers is that approval of the pension settlement would destroy the possibility of achieving additional pension reforms vitally necessary to reduce the over $5 billion in unfunded pension debt burden on taxpayers by recklessly converting state pension benefits into contractual obligations, thereby locking in a massive long-term, stealth tax increase on the people of the state. Passage of the pension settlement would transform state pension benefits from their currently advantageous legal status as legislative policies that can be changed as necessary to promote the public interest into binding contractual obligations which cannot be changed even for this important purpose by the General Assembly through the exercise of its ordinary legislative powers. Enactment of the settlement legislation negotiated during the union pension lawsuit would produce this devastating consequence by introducing the element of “agreement of the parties” into the “circumstances of its adoption,” thereby satisfying the first and most important test of contract existence the courts apply when deciding whether government pension laws create contract rights.[6]

“If all of this financial harm to taxpayers isn’t enough,” Murphy continued, “the impropriety of the role the Superior Court has assumed in the pension lawsuit, the failure of the Superior Court to consistently maintain an appropriately objective, neutral, and impartial disposition in this case, the court’s orchestration of secret settlement negotiations, secretive, closed processes of review by the unions and General Assembly have inflicted grave injury on the political rights of the People.”

“The only appropriate role for the Superior Court in this case is to adjudicate the union complaint that the pension reforms are unconstitutional. It is not legitimate for the court to provide an alternative law making venue for re-negotiation of valid laws established through legitimate legislative processes that truly and accurately express the will of the people through their elected representatives. The conduct of the pension litigation has offered unjustifiable special treatment to privileged special interest groups in a manner subversive of the rule of law and democratic accountability. The secrecy of the settlement negotiations and wrongful exclusion of citizens from the process deprived the People of fair time and opportunity to review and evaluate the impact of the settlement on their interests.

Murphy also noted that, “In its eagerness to convert state pension benefits into implied contracts in an earlier ruling that paved the way for the current process, the Superior Court inappropriately sidelined, and in some cases completely ignored, some of the most important and long-established public interest doctrines in American constitutional law.[7] The Court neglected in that instance the vital first step in the proper decision process in legislative contract cases by not first asking whether the legislature even had legitimate authority to establish a contract on the issue at hand without impermissibly impairing the essential protective or “police powers” of the state necessary to promote the public interest.[8] It is, of course, impermissible for the legislature to contract away its “police powers,” defined as those essential powers of government necessary to safeguard public welfare. The court revealed its true agenda with this omission, betraying its strong preference to find in favor contract existence and thereby departing from an appropriately impartial consideration of the issues. This tendency was also manifest in the Court’s predilection to rely on civil employment law cases and even some government contract cases that didn’t invoke this fundamental question of the impermissibility of contracting away or otherwise forfeiting the essential powers of government to buttress its implied contract finding. The notion that the first duty of government is to protect and promote the public interest was clearly inconvenient to the Court’s agenda which occasioned the exertion of great energy and initiative to dispatch this doctrine from the analysis.”

“Beyond this,” Murphy continued, “the implied contract decision of September 2011 also unfairly and inappropriately engaged in a variety of unsound stratagems to overcome the absence of any statutory language or legislative circumstances evincing any intent of the People or their elected representatives whatsoever to establish state pension benefits as contractual obligations of the state and its taxpayers. In the absence of finding what it wished for in either statutory language or circumstance, the Court went on a fishing expedition to import every manner of non-controlling, tangential substitutes imaginable ranging from constitutional and statutory provisions in other states, references to continuing education texts, as well as a survey of the historical evolution of contract theory, again, drawing heavily from cases in which the inconvenience of the matter of the preservation of the essential powers of government was not at issue and therefore did not hinder the Court’s ambitions.

“In one final affront to the rights of the People,” Murphy continued, “the Court has also erred in conducted its business on the assumption that the General Assembly has the legitimate constitutional authority to add $290 million to the state’s pension debt while ignoring the prohibition on indebting of the taxpayers in excess of $50,000 without holding a referendum to secure express authorization and approval of the voters as clearly required in Article 6, Section 16 of the Rhode Island Constitution which reads:

‘The general assembly shall have no powers, without the express consent of the people, to incur state debts to an amount exceeding fifty thousand dollars, except in time of war, or in case of insurrection or invasion; nor shall it in any case, without such consent, pledge the faith of the state for the payment of the obligations of others.’” [9]

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Footnotes:

[1] Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2013. EBRI Issue Brief #405, October 2014. Retrieved from http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=5451
[2] Plan Sponsor Council of America, 56th Annual Profit Sharing and 401(k) Survey, October 17, 2013. Retrieved from http://www.psca.org/401-k-plans-are-working
[3] Employees Retirement System of Rhode Island Actuarial Valuation Report as of June 30, 2014.
https://d10k7k7mywg42z.cloudfront.net/assets/54ae998eedb2f34240004708/ERS_VAL2014.pdf
[4] U.S. Social Security Administration. Social Security: Understanding the Benefits. (2014). Washington, DC. Retrieved from http://www.ssa.gov/pubs/EN-05-10024.pdf
[5] Social Security Trustees Report, 2015. Retrieved from http://www.ssa.gov/oact/trsum/
[6] This traditional “agreement of the parties” test has been the controlling determinant of decisions in a long history of major court decisions involving disputes about the legal status of government pensions as well as the existence and impairment of government contracts for decades. Among the instructive cases are Dodge v. Board of Ed. of Chicago, 302 US 74 (1937), United States Trust Co. of NY v. New Jersey 431 US 1 (1977), Indiana ex rel. Anderson v. Brand 303 U. S. 95, 104-105 (1938), and Retired Adjunct Professors of State of R.I. v. Almond 690 A.2d (R.I. 1997).
[7] See Rhode Island Council 94, AFSCME, AFL-CIO, et al. vs. Donald L. Carcieri, et al. No. 10-2859 (September 13, 2011). Retrieved from https://www.courts.ri.gov/Courts/DecisionsOrders/decisions/10-2859.pdf
[8] On the necessity of first inquiring about whether the legislature is legitimately empowered to form contracts with reference to the requirement that it reserve its police powers, see U.S. Trust Co. of NY v. New Jersey, 431 US 1 – Supreme Court 1977 where the court reasoned “When a State impairs the obligation of its own contract, the reserved-powers doctrine has a different basis. The initial inquiry concerns the ability of the State to enter into an agreement that limits its power to act in the future. As early as Fletcher v. Peck, the Court considered the argument that “one legislature cannot abridge the powers of a succeeding legislature.” 6 Cranch, at 135. It is often stated that “the legislature cannot bargain away the police power of a State.” Stone v. Mississippi, 101 U. S. 814, 817 (1880).[20] This doctrine requires a determination of the State’s power to create irrevocable contract rights in the first place, rather than an inquiry into the purpose or reasonableness of the subsequent impairment.”
[9] Constitution of the State of Rhode Island and Providence Plantations. Retrieved from http://webserver.rilin.state.ri.us/RiConstitution/ConstFull.html