Rhode Island’s state and local unfunded pension liability is $18 billion – nearly twice what state officials estimate – according to an Arlington, Va., think tank.

Researchers from the Mercatus Center at George Mason University argue that inaccurate accounting contributes to the large difference.

The state’s $9.3 billion estimate is figured on assumed discount rates based on the expected return on pension-asset investments.

The study, though, argues that pension liabilities should be valued based on relative risk and thus the return on Treasury bonds is the appropriate discount rate to use when valuing liabilities.

“The result of this miscalculation is that many municipal governments are in far worse shape than is currently reported, which presents serious revenue challenges for a number of Rhode Island municipalities,” said the report, authored by Eileen Norcross and Benjamin VanMetre and released Tuesday.

They red-flagged bankrupt Central Falls — which has an $80 million pension funding shortfall — along with Providence, Johnston, Cranston and Newport.

The Aug. 1 Chapter 9 filing by Central Falls, which already had been under state receivership, has triggered several ratings downgrades of municipalities and conduit issuers throughout the state.

Legislation passed in June, aimed at protecting bondholders, requires local governments to guarantee lenders first rights to their property taxes and general revenue, should they file for bankruptcy.

Fitch Ratings and Standard & Poor’s rate Rhode Island’s general-obligation bonds double-A, while Moody’s Investors Service rates them Aa2.

The Rhode Island General Assembly is in a special session to consider pension-overhaul legislation proposed by Gov. Lincoln Chafee and General Treasurer Gina Raimondo. The House and Senate finance committees will hold a joint hearing at 3 p.m. Wednesday to hear technical amendments and other possible changes to the bill, formally called the Rhode Island Retirement Security Act.

According to a notice on the General Assembly web site, the finance committees will meet separately on Thursday and likely vote on an amended version of the bill.

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