PROVIDENCE, R.I. — Gov. Lincoln Chafee and state General Treasurer Gina Raimondo touted Rhode Island's work with struggling communities Monday morning at The Bond Buyer's Symposium on Distressed Municipalities.
"We're pioneers in Rhode Island. I always say we're all in it together. If not, the problems of cities and towns will wash up on your shore," Chafee said in an interview after his speech, defending the state's involvement working with struggling cities and towns.
While Chafee and Raimondo addressed the gathering of 250 people at the Omni Providence hotel downtown, some retired firefighters outside picketed in protest over the state's overhaul of pension benefits, which both advocated in 2011. A legal appeal to that law is in mediation.
Rhode Island's efforts at changing its pension systems and the state's work in getting 19,000-population Central Falls in and out of bankruptcy in 13 months have generated national headlines. Eight Ocean State cities received downgrades from Moody's Investors Service in 2011.
"Massachusetts set the stage with Chelsea and Springfield, and what we do with distressed communities is modeled after that a little bit," said Chafee, an independent. Rhode Island's involvement with Central Falls dates to the mid-1990s, when it took over the 19,000-population city's school system.
Chafee — a former Warwick mayor before his rise to U.S. congressman and senator, and ultimately, the governor's office in 2010 — said local help is a hard sell at the state level. In Rhode Island, he said in his speech, only 21 of 113 lawmakers served locally on city councils or boards of education.
"It's hard to convince these people about local issues such as property taxes. It's a hard sell with those numbers," he said. "Nonetheless, the work continues and we're providing tools for local communities."
Raimondo, a Democrat who may challenge Chafee in 2014, championed the state pension law two years ago. She said bondholder reaction has been highly positive.
"We see the benefits in the bond market," she said. "Our last bond sale was three times oversubscribed. Spreads are tighter than they've ever been in the history of Rhode Island. Investors see that we're on the right track."
Moody's Investors Service rates Rhode Island's general obligation bonds Aa2, while Fitch Ratings and Standard & Poor's assign AA ratings.
"My kids called me the pension lady," said Raimondo, a mother of two. "I always talked pensions. But pension problems won't go away unless you fix them. My kids go to Providence public schools. I'd have to drop off my daughter at school while wondering if her teacher, who is in her mid-30s, will ever see her pension."
Rhode Island, should its pension law hold up, stands to save $4 billion over 20 years and a further $1 billion for its cities.
Raimondo, in an interview after her speech, said the takeaway from Rhode Island's story is "taking the time to make the difficult choices. We did the hard work and we did the math."
She said selling a complicated issue such as pension reform was easier when she boiled the matter down to basics. "Everyone understood the painful alternative."
Raimondo also said she was "puzzled" by comments from protesting firefighters who said state officials left them out of the loop during pension talks. "We spent hours in discussion with firefighters," she said. "This is not easy, but we can't back down."
The treasurer also said Rhode Island and its cities stand to lose significantly should the state lose pension overhaul in the courts. "It would be devastating. We would have to pass $4 billion of tax increases onto the public, and you'd see numerous cities in bankruptcy."
Moments earlier, Raimondo told the gathering: "I do hope someday we have some conference other than distressed municipalities. But overall, I'm very optimistic that we can face our problems with our fact-based, transparent approach."
