Raimondo Notes Johnston's Moves to Fix Local Pension System

State Treasurer Gina Raimondo recently noted the work being done in Johnston to reform its pension plan as an example of how local officials are continuing the work highlighted by the Rhode Island General Assembly's passage of a controversial set of state pension reforms in November, 2011.

Mayor Joseph Polisena, who successfully lobbied the town council to create a pension board in early 2011, recently proposed a 20-year freeze on cost of living adjustments, or COLAs, among other reforms for local pensions.

During an interview on Wednesday at Johnston Town Hall, Polisena said the town had not yet received a response from the unions, adding that they may face a complete loss of retirement payments without some kind of agreement.

"The pensions took 35, 40 years to get where they are today — it's going to take a long time to get them in line, but we'll get them in line," Polisena explained. "It's going to take some compromise from the active employees on the police and fire [departments] and the retirees."

Polisena has also repeatedly said that he would not support what he terms a "pension bailout tax" levied on property owners. He estimated that the average household would face additional taxes of $1,875 per year, every year for 24 years to pay for the expected pension costs, "but that ain't going to happen."

Without substantial reforms, one possibility is putting the town's pension trust fund into receivership, which could result in massive benefit cuts or a liquidation of the fund, said Polisena. Another is an end to payments by the pension system, since the town simply wouldn't have the money to pay out.

"This is not a threat," the mayor explained. "I have no choice — if they don't come to the table and agree to [the town's proposals], then we will have to proceed to the next step, which they're probably not going to like."

Polisena, who receives a pension through the Johnston Fire Department, added: "If I lose my pension, I lose my pension. I'm here to keep the town solvent — I'll sacrifice my pension before I put this on the backs of the taxpayers."