Rhode Island Gov. Lincoln Chafee and Treasurer Gina Raimondo warned lawmakers Monday of dire consequences if they don't pass their ambitious public pension overhaul proposal.
Chafee and Raimondo told a legislative panel reviewing their proposal that it would save taxpayers billions of dollars while making the retirement system viable for public workers.
"Passing this reform has enormous implications for Rhode Island's economy," said Raimondo, a Democrat. "There are a lot of people watching the work that you are doing. ... It's necessary for the future prosperity of Rhode Island, so we have the money to invest in schools, in infrastructure, in services."
Their proposal would set up a new retirement system that combines 401(k)-style accounts with traditional pensions for most public workers. It also would raise retirement ages and suspend cost-of-living pension increases for most retirees for an estimated 19 years.
Altogether, the changes are projected to save taxpayers $3 billion over 10 years. Rhode Island's unfunded pension liability is $7 billion, nearly as large as the entire state budget for one year.
Public unions are fighting the proposal and promise to sue the state if the plan is adopted.
Monday's hearing by the House and Senate finance committees was the first of four scheduled on the legislation. It will be at least a few weeks before the General Assembly votes on the measure.
In remarks to the panel, Chafee said Rhode Island would be the first to make such dramatic changes to its retirement system and could become a model for other states.
"This is a global issue," Chafee, an independent, said of the problems caused by rising pension costs. "It's happening all over the world. Rhode Island has a chance to be a leader."