Truce in the Pension Wars
A Win for Rhode Island’s Pension Reform

Pension reformers in Rhode Island saw a victory this week as the state government reached a settlement with unions that have brought a suit against the state’s pension reform. The NYT reports on the win for the state’s Democratic governor Gina Raimondo, who was the prime mover behind the original reform:

The $14.8 billion pension system, on the brink of collapse, was overhauled in 2011 and again in 2012. The legislature created a hybrid plan that split direct contributions between the state and employees. It also suspended cost-of-living adjustments and raised the retirement age by five years, measures intended to save $4 billion over 20 years.

But the changes infuriated the public employee unions, which challenged the overhaul as unconstitutional and worked against Ms. Raimondo’s candidacy last year for governor. She eked out a victory anyway and is widely seen as having established a template for other states and municipalities to follow as they face their own fiscal issues.

The NYT reports that “six of the nine unions that sued the state agreed to the settlement,” which softens some of the provisions of the original fix.

Though Democrats and their allies have often been more inclined to defend what we call the blue model,  some Democrats, like Rhode Island’s Raimondo, have responded to the collapse of that model with important reforms, and varying degrees of success. For “reforming Democrats,” as opposed to true-blue believers like NY Major Bill de Blasio, fixing the pension crisis is an important priority. As the blue model continues to collapse—and the pension crisis worsens—watch for the split in Democratic party between the “blue lemmings” and the reformers to grow.

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