A Rhode Island Superior Court judge removed a major hurdle to pension overhaul in Providence by calling a settlement between the capital city and its retired police officers and fighters “fair, adequate and reasonable.”
Sarah Taft-Carter’s ruling enables both sides to finalize an agreement, which will include the suspension of all cost-of-living adjustments for 10 years, and eliminating 5% and 6% compounded COLAs altogether. In additon, retirees 65 and older will move onto Medicare.
The decision “clears the way for Providence’s pension reforms to move forward and marks an important milestone on the road to putting Rhode Island’s capital city on a fiscally sustainable path,” Mayor Angel Taveras said in a statement. “I am thankful that Judge Taft-Carter agrees our pension settlement is a laudable example for other municipalities to follow.”
Providence struck the deal last year when Taveras, who likened the city’s finances to a “Category 5 hurricane,” urged an overhaul to rein in escalating pension costs. The agreements, he said, would reduce the city’s unfunded pension liability by an estimated $200 million.
Taveras expects the city, which once faced a $110 million shortfall, to balance its budget by year’s end. “Its balanced budget for 2013 indicates some progress toward restoring fiscal stability,” Moody’s Investors Service said in January.
Moody’s rates the city’s general obligation bonds Baa1, while Fitch Ratings and Standard & Poor’s both rate them BBB.
Two weeks ago, the city sued longtime actuary Buck Consultants LLC, accusing the firm of miscalculating $700,000 of savings expected to achieve through pension overhaul.
