Retiree costs, including the cost of funding health care and pension fund contributions, now amount to 26 percent of all taxes collected by local governments in Rhode Island, according to a study by the Rhode Island Public Expenditure Council. The state's largest city, Providence, carries one of the biggest burdens: Pension and health retiree costs annually amount to nearly half of taxes collected by the city. Central Falls, the Rhode Island city in state receivership, has an even greater burden, with its retirement costs amounting to 60 percent of taxes.
How does a city cope with such all-consuming retiree costs? Simple. Politicians just don't fund them adequately, creating future liabilities. Providence, for instance, owed $148 million but put away just $106 million last year. Central Falls owed $6.4 million but paid just $2.9 million.
Such funding holidays have led to massive shortfalls in retiree funding. Providence's unfunded retiree liabilities are estimated at $2.3 billion for pensions and retiree health benefits. These are in addition to an estimated $7 billion in state unfunded liabilities.
Such funding holidays have led to massive shortfalls in retiree funding. Providence's unfunded retiree liabilities are estimated at $2.3 billion for pensions and retiree health benefits. These are in addition to an estimated $7 billion in state unfunded liabilities.
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