June 12, 2021


Happy Saturday! Here’s another edition of my weekend column for WPRI.com – as always, send your takes, tips and trial balloons to tnesi@wpri.com and follow @tednesi on Twitter.

1. Providence’s plan to borrow upwards of $700 million to shore up the pension fund has received a rather chilly reception in its initial vetting at the State House, with Treasurer Magaziner calling it a “risky” proposal and “a gamble” in testimony to the House Finance Committee. Tellingly, Senate Finance has yet to even schedule a hearing on the bill — a signal of where it falls on legislative leaders’ priority list as the session enters the homestretch. Mayor Elorza admits he’s facing serious skepticism, but he’s adamant that a bond is Providence’s best available option to address a $1.2 billion problem. “This is a ticking time bomb for the city,” Elorza said on this week’s Newsmakers. The crux of his argument is that Providence no longer has meaningful wiggle room on its pension obligations — he says a 2012 judicial consent decree and a 2020 state Supreme Court ruling effectively lock in the payments, unless city retirees wake up one day and volunteer to cut their own benefits. Since the money has to be paid either way, he argues, the city might as well engage in some financial arbitrage by borrowing the money upfront and attempting to make enough investing it in the financial markets to help cover some of that $1.2 billion. “If you’re against this, then I assume you’re against this because there’s a better option out there,” Elorza said. “And we need to push and ask — well, if not this, what are we going to do?” One criticism the mayor has taken to heart: that city residents should get to vote on such a huge transaction in a referendum before it goes forward. “I’m very flexible,” he said. “If that’s what’s stopping this from going forward, I’m happy to put it to a special election and put it to the voters.”

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