Warwick City Council President Steve Merolla (Ward-9) characterized the Warwick City Budget as the worst he’s ever seen. And the situation doesn’t figure to improve any time soon.
“To say that this is the worst I’ve seen it in 20 years is an understatement,” said Merolla. “This is absolutely the worst I’ve ever seen it.”
Merolla cited the fact that school department is asking for an additional $8 million in funding. The budget, prepared and submitted by former Mayor Scott Avedisian, level funds the school department. That led to the school department threaten to sue the city of Warwick for more money.
School Department and Retirement Benefits Loom Large
(Avedisian stepped down earlier this month to become the CEO of the Rhode Island Public Transit Authority. Former City Council President Joseph Solomon became Mayor of Warwick when he stepped aside.)
The budget the council is considering, proposed by Avedisian, calls for no tax increase. But it level funds the school department just months after the school department agreed to pay school teachers raises. Due to this proposal, the schools are considering laying off 73 teachers.
Terrifying Costs of Retirement Benefits
But forget about the school department situation, the council seemed in despair over the city’s financial situation.
Merolla, who has served on the council for 20 years, said he is alarmed by the exploding cost of retirement benefits for taxpayers.
Personnel Director Jeanne Bouchard pointed out that the cost of benefits have increased by $2.2 million. The bulk of the cost went to retiree health care costs.
“We can raise about $5 million with a maximum tax increase. When you have one line item that takes up about half of what we can raise…that’s a problem,” said Merolla.
City Council Finance Chairman Ed Ladouceur (Ward-5) expounded on Merolla’s comments. He said that the city is facing a huge problem due to the costs of retirement benefits.
“Whether anyone wants to admit it or not, we’re heading for a big problem. And this was spoken about for years, on this council, before I became a councilman. And there were those who criticized people for saying that there was a problem,” said Ladouceur.
“Heading For A Big Problem”
Ladouceur seemed to be referring to former Warwick City Councilman Robert Cushman. Cushman served from 2007-2008. Cushman was an advocate for reducing the city’s retirement costs on behalf of taxpayers. He lost a tight election in 2008, amidst strong opposition from city workers. (Does anyone wonder why more people don’t tackle these issues?)
“You can ignore the facts. But the facts are the facts. Numbers don’t lie. People lie. But numbers don’t lie,” said Ladouceur.
“How can anyone say this is sustainable.”
The city’s actuaries have told the city to set aside $25 million to pay for their health care retirement obligations. The city is putting nothing aside, Merolla pointed out. The city has an unfunded retiree health care cost of roughly $280 million. (This doesn’t include pension costs.)
Exploding Unfunded Liabilities
“For anyone who is an employee and sitting in the audience tonight, we’re not funding your retirement health care at all,” said Merolla. “That $25 million isn’t even a true number, because it assumes we’re making the payments in previous years.”
Merolla explained his point.
“We have annual retirement contributions for pensions, do we not.”
“Yes”, said Brian Silva, the current city Treasurer who has taken another job in Coventry.
“We have annual retirement contributions for health care, do we not? And we’re not making them. Correct?” Merolla asked.
Silva replied, “that’s correct.”
High Praise For Solomon, Merolla
Some residents at the meeting were alarmed by the deteriorating financial situation in the city.
“Are we sitting on the deck of the Titantic”, asked Warwick resident Roger Durand. “This is awful. But it’s not unforeseen.”
Durand, however, had high levels of praise for current city leaders.
“I can’t think of a better man to be mayor and lead our city right now than Joe Solomon.”
He had similar praise for the council.
“This council is the best council I’ve seen to join hands and solve this problem.”