Pension giveaways hurt city

By David Salvatore
As 2015 draws to a close, Providence has received some welcome good news. In the recent Milken Institute rankings of Best Performing Cities in the United States, the Providence-Warwick metropolitan area jumped thirty spots to break the top 100, landing at 95 for 2015, after finishing at 126 in 2014. Providence was also ranked the No. 1 real estate market to watch in 2016 in the United States.
While Rhode Island’s Capital City certainly has much to be proud of, we have been faced with daunting challenges, from an unexpected budget shortfall, an ongoing dispute between Mayor Jorge Elorza and our city’s firefighters, and economic development delays, to name a few. As someone who takes the city’s budgetary and economic matters seriously, I am very concerned about the direction of our city.
That is why I expressed my disappointment when City Council President Luis Aponte made the decision, without City Council notification, to hire a former council member, Balbina Young, for a newly created position titled “liaison to the city clerk’s office.” The $60,000 per year job was not vetted during budget deliberations, raising the kind of red flags that caused several of my colleagues and I to oppose this year’s budget.
A recent report from the city’s actuary confirmed we were right to be concerned. This new position will earn a $30,500 annual pension post-employment, assuming the employee stays in the post for five years. Because this individual served 22 years on the City Council, that time will also be applied to a pension, creating a situation where the final pension payments will far exceed the employee’s contributions to the system and whatever investment earnings those contributions made. This is not only fiscally irresponsible, but it’s wrong in a time of financial distress.
There are real costs for ignoring the fragile state of our city’s finances and the pension system, costs that will be punishing for taxpayers if city leaders do not act now. We all know the fiscal and economic ramifications of making political decisions that are not in the best interest of the city and its residents. According to a recent assessment of Providence finances, Moody’s Investors Service cut the outlook on the city’s credit worthiness to negative, citing concerns related to rising pension and health care costs. That increases the city’s costs of borrowing, thus creating a spiral of severe and dangerous economic consequences.
This is why I was stunned when the Elorza administration refused to comment during a recent City Council Finance Committee meeting regarding the issue of former elected officials who apply time served on the City Council to hike their future pensions while serving in municipal government. At a time of fiscal and economic uncertainty, when we are asking our public safety employees to work more for less, it is troubling to know that this administration is not serious about making sure some employees aren’t enjoying a bonanza at the expense of employees and taxpayers.
It is frustrating when the city can move quickly to secure jobs for well-connected political insiders, but seems unable to move forward on critical decisions aimed at promoting economic development in Providence, such as the delay in approving tax stabilization agreements for the Route 195 redevelopment zone and the Fog-arty Building.
We have a great deal to be proud of in our city, but the barriers we continue to create by playing politics will have economic and fiscal ramifications that we cannot overcome. The mayor and City Council president need to understand that the business community outside of Providence is paying close attention to the actions of city officials.
As city leaders, our responsibilities are simple: keep our neighborhoods clean, our neighbors safe, and our economy vibrant. And when we see economic difficulties, we need to have a clear and consistent approach that puts the interests of taxpayers first. Creating new jobs aimed at helping former city officials feather their nests with sizeable public pensions, at a time when our city is facing real financial challenges, is irresponsible. It is an abdication of the leadership we need to be providing on behalf of our constituents.
— David Salvatore is a member of the Providence City Council.