A long-running debate over how to address the badly underfunded state pension system in Rhode Island shifts into high gear today (October 26), when lawmakers hold their first public hearing on overhaul legislation favored by Governor Lincoln Chafee and State Treasurer Gina Raimondo.
Hundreds of demonstrators are expend to descend on the Capitol to weigh in on the legislation, which would raise the retirement age and cut benefits for future state pensioners, as well as take the unprecedented step of cutting benefits for those who have already retired.
While seven states — Colorado, Maine, Minnesota, New Jersey, Oklahoma, South Dakota and Washington — have cut benefits for current retirees over the last two years, Rhode Island has never done so, PolitiFact Rhode Island reports . Chafee and Raimondo want to freeze retirees' cost-of-living increases until the pension system is adequately funded, which could take two decades or more.
The unpopular proposal is a reflection of the challenges facing Rhode Island's pension system. The New York Times reports that 10 cents of every state tax dollar is now used for pensions, and the state is in the unsustainable position of paying more to its retirees than it collects from its current public workforce. Rhode Island's total pension liability is about $7 billion, or the almost as big as the annual state budget, according to The Associated Press .
Chafee and Raimondo have used the glaring numbers to try to build support for their legislation. Earlier this week, Chafee said Rhode Island could become a model for struggling governments around the country, and around the world, by making sweeping changes to a badly overextended pension system. "This is a global issue," Chafee said, according to AP . "It's happening all over the world. Rhode Island has a chance to be a leader."