Public-sector unions on Tuesday hailed Gov. Lincoln Chafee's call for negotiations to settle a closely watched lawsuit over Rhode Island's landmark pension overhaul, but its main architect, the state treasurer, insists the dispute should be left to the courts.
J. Michael Downey, president of Rhode Island Council 94, said there's still time to craft a compromise that prevents a protracted court battle. While there are no negotiations currently under way, Downey said, Chafee's comments were a promising development in the contentious fight over public pensions.
"We have been — and are still — willing to come to some resolution rather than fight this through the courts for years," Downey told The Associated Press.
The unions' lawsuit has attracted national attention because it likely foreshadows similar battles elsewhere as states grapple with their own pension problems. On Friday, a judge will hear oral arguments on the state's motion to dismiss the lawsuit.
On Monday, Chafee told WPRI-TV that the state should pursue negotiations to prevent a budgetary calamity if the overhaul is struck down.
"We're the ones stuck with the bill if we fail in court and so we are the ones that really have the responsibility to pursue every avenue possible," the independent governor said. "That includes negotiations to get this settled so we don't fall into a deep, deep hole if the court case is adverse to us."
Treasurer Gina Raimondo, a Democrat who championed the pension overhaul, wants to see the matter decided by the courts. Top lawmakers also remain supportive of the legislation, which Chafee signed into law a year ago. Raimondo noted that the pension law is already a compromise of sorts; lawmakers softened some provisions after hearing from public-sector unions during days of hearings on the bills.
"We have a strong case," she said. "We have to let this process play out. It's in the courts. I trust the courts. Let's let it weave its way through."
The law is designed to save billions of dollars in future years by suspending pension increases for years, raising retirement ages and creating a new retirement system that combines traditional pensions with 401(k)-like accounts. The changes, which went into effect July 1, affect active and retired state workers, teachers and those municipal employees covered by the state's pension system.
When the law was passed, supporters — notably Chafee and Raimondo — argued that without significant action, rising pension costs would swamp state finances, putting funds for education, roads and future retirement benefits at risk. Before Rhode Island's reforms passed, its pension costs were set to jump from $319 million in 2011 to $765 million in 2015 and $1.3 billion in 2028. The state's annual budget is $7 billion.
Workers and retirees accused state leaders of reneging on promised benefits and urged Chafee and the General Assembly to negotiate an alternative to the proposal.
"This was shoved down people's throats," said Bob Walsh, executive director of the National Education Association Rhode Island. "This can be resolved through real conversation."
Any compromise that is worked out between Chafee, unions and lawmakers could be considered by the General Assembly when it convenes next month, Walsh said. He said it's too soon to say what form a compromise might take — pension increases, retirement ages and types of benefit plans could all be part of the discussion.
Top lawmakers, however, remain supportive of the law as written. House Speaker Gordon Fox, D-Providence, said in a statement that he was "extremely proud" of the process that led to the overhaul.
"After months of review, which included 30 hours of open public testimony, we enacted a bill that we believe will withstand the challenge currently pending in our courts," he said.
Chafee spokeswoman Chris Hunsinger said she was unaware of any plans by Chafee to begin negotiations with union leaders. She said Chafee remains confident about the state's chances of prevailing but is open to considering ways to stabilize the pension system without a long and uncertain court battle.
"I'm not sure what the perfect time for negotiation would be, but I do know it's never too late," she said.