RI court to hear arguments in pension case

  • Article by: DAVID KLEPPER
  • Associated Press
  • December 7, 2012 - 2:00 AM

PROVIDENCE, R.I. - Attorneys for the state of Rhode Island will ask a judge to dismiss a legal challenge to the state's landmark pension overhaul filed by public-sector unions.

The hearing in Judge Sarah Taft-Carter's Providence courtroom on Friday is the highest profile one yet in the legal dispute over the year-old pension law. Unions argue the changes to state retirement benefits are unconstitutional and unfair.

State leaders insist that without the changes, ever-escalating pension costs would swamp state finances. They say the pension law — which passed overwhelmingly in 2011 — was carefully crafted to withstand legal scrutiny.

The litigation could have far-reaching implications as states around the country seek to rein in pension costs. Collectively, states face a $1.4 trillion gap between what they've promised workers and what they've set aside to pay for those benefits.

Rhode Island has attracted a high-profile defender: New York attorney David Boies has asked to join the legal team defending the law because of what he has said are the case's implications for other governments dealing with their own pension problems.

A ruling on the state's motion to dismiss the unions' lawsuits is not expected immediately.

The new law is intended to save an estimated $4 billion over 20 years by suspending retiree pension increases, raising retirement ages for many workers and creating a new benefit plan combining traditional pensions with 401(k)-style accounts. Before the changes were enacted, the state's pension costs were set to jump from $319 million in 2011 to $765 million in 2015 and $1.3 billion in 2028.

The changes were signed into law by Gov. Lincoln Chafee a year ago and went into effect July 1. They affect 66,000 active and retired state workers, teachers and municipal employees.

Attorneys for the unions and the state agree the legal dispute is likely to be protracted, expensive and complicated. Chafee, one of the leading supporters of the law, now says he would like to negotiate a settlement with the unions to avoid the fiscal calamity that a defeat for the state would mean.

Treasurer Gina Raimondo, the main architect of the law, said she feels confident about the state's chances. She opposes negotiations with the unions at this point.

"We're in the early innings," Raimondo, a Democrat, said of the case. "The law is in our favor and we have an excellent legal team. We're going to do our very best to protect the work of the General Assembly."

The unions, however, argue that the pension law is an unconstitutional impairment of an implied contract. They insist lawmakers had a duty to look for alternatives before voting to withhold pension benefits that had already been promised.

"They didn't even listen to us," said J. Michael Downey, President of Council 94, a union representing several thousand active and retired public workers. "We've been willing to sit down and resolve this but our ideas weren't listened to."

Also on Friday, the state will ask that Boies be allowed to represent the state's pension system as a member of the state's legal team. He has asked for a $50 hourly fee for his work — a fraction of his regular fee. Boies is famed for his work representing the government in its antitrust case against Microsoft and in Al Gore's unsuccessful presidential campaign challenge in the U.S. Supreme Court.

The state had asked the Rhode Island Supreme Court to block Taft-Carter from ruling in the case because her mother and son receive state pensions, but on Thursday the high court declined to intervene. As a state judge Taft-Carter is also eligible for a state pension.

© 2018 Star Tribune