As Providence dons its spring vestments, Mayor Elorza is touting what he calls a “city on the rise.”
As is the case with most politicians, Elorza’s sunny view of Providence reminds residents that things have improved on his watch.
What Elorza didn’t mention, naturally, is the nimbus of red ink that hangs over the city: the $1 billion in unfunded public employee pension liability. The city has less than 30 percent of the money needed to meet pension obligations. Then there are retiree health care obligations that threaten to swallow millions more.
The billion dollar pension bill doesn’t become due tomorrow morning. Yet it’s already crowding out other investments. More than two of every ten dollars generated by property taxes goes to the pension fund. The tally just this year is estimated at nearly $90 million.
Various solutions to the pension liability have been batted around in recent years. Getting money from selling or leasing the Providence water system, which supplies more 60 percent of the state with drinking water, is Elorza’s latest idea. The problem is that this became a non-starter at the Statehouse, where lawmakers from outside the city don’t want their constituents paying higher rates to help solve the Providence pension mess. Not to mention that there is no firm legal opinion on who – the city or the water customers –owns the Scituate Reservoir and water system.
So the General Assembly put off the day of reckoning. But this attitude can’t prevail forever without pushing the capital city into bankruptcy.
A Providence bankruptcy would be a disaster for such a small city-state. Political decisions would be ceded to a judge or receiver. Money for schools, police and parks would be pinched. The national media coverage would make Providence into a new Detroit. Would businesses want to come to a bankrupt city? What would happen to property values?
The city has other assets, but none worth so much as the water works. Providence owns a Donald Ross-designed golf course, Triggs Memorial, and a lovely urban park, Roger Williams. Yet no serious politician has proposed turning them into condo developments.
It is true that Providence politicians caused this fiasco. Particularly responsible was Buddy Cianci, the late rascal king mayor who was the master of using taxpayer money to buy support of city workers with bloated pension benefits. Many lawmakers think it’s wrong for their constituents to bail Providence out of bad political decisions. Maybe they ought to consider that one of Providence’s big challenges is that more than 40 percent of the city is tax-exempt property that’s home to colleges, hospitals and religious institutions.
Still, the Smith Hill crowd needs to help. Providence generates millions in state sales and income taxes that pay the freight for smaller communities. In 2011, the Assembly did responsibly tackle the underfunded state employee pension system, but left the community-run pensions on their own. As State Treasurer Seth Magaziner reported last week, Providence isn’t the only city or town facing burdensome pension obligations.
Lawmakers should help Providence and other communities by immediately setting up a study commission on municipal pensions. This was done by then-State Treasurer Gina Raimondo during the 2011 state pension overhaul.
It’s also way past time for serious scrutiny of regional consolidation of services, especially such costly items as police and fire departments.
A state not large enough to be a county anywhere west of the Hudson River needs to finally figure out how to forge combinations to save money. Why do Central Falls and Pawtucket need separate fire and police departments? Should Aquidneck Island have a regional school and public safety district?
Rhode Island is a historical accident, only a state because a 17th Century preacher, Roger Williams, couldn’t get along with the theocrats who ran colonial Massachusetts. Isn’t it time the state sheds its horse and buggy lineage and comes up a government for the Internet Age?
Scott MacKay’s commentary can be heard every Monday morning at 6:45 and 8:45 and at 5:44 in the afternoon.
