Mayor Scott Avedisian has vetoed an ordinance that would have required actuaries to report to the council concerning annual contributions to the city's retirement health care contribution.
The council gave second passage to the measure on a 5-4 vote, with Council President Bruce Place, Ward 1 Councilman Steve Colantuono, Ward 6 Councilwoman Donna Travis and Ward 8 Councilman Ray Gallucci voting in opposition.
In a letter that was sent to the Warwick Beacon Friday, Avedisian noted he has several concerns regarding the legislation; the first being that no fiscal note or defined funding source was identified or designated to support the legislation.
“The big issue here is that there was no fiscal note,” he again stated in an email exchange Monday. “I am not going to hire anyone or undertake anything that is not funded.”
Additionally, he referenced a spring 2011 council meeting at which Jefferson Solutions, Inc., a company that assists government and municipal employers in obtaining answers to issues that impact accounting standards, provided a comprehensive overview of the city’s retiree health care status, costs and liabilities.
When questioned, Avedisian wrote, Jefferson Solutions recommended that the city continue its current practice of funding retiree health care costs in the annual budget.
“[They] specifically strongly advised against developing the type of defined contribution plan described in this legislation,” Avedisian said in the letter. “In fact, Jefferson Solutions cautioned that, because of the fluid nature of health care nationally, any proposed funding dedicated to a retiree health care trust could be in jeopardy of forfeiture or statutory funding obligations should legislation at the national level be enacted that is contrary to an existing program.”
Avedisian also views the ordinance as “superfluous and unnecessary.”
“As a matter of practice, the city has historically retained the services of a health care consultant(s) responsible for regularly reviewing the City’s health care costs and obligations relative to unfunded liability for retiree health insurance along with the City’s pension actuaries,” he wrote. “As is evident in the City’s recent union contracts, which alone reduced the City’s pension liability by $32 million, this administration remains committed to ensuring the fiscal stability or our community and to meeting all of its pension and health care obligations, as the City has done for nearly 20 years.”
In a phone interview Monday afternoon with Ward 9 Councilman Steve Merolla, the sponsor of the ordinance, he said he “has to chuckle” at what the mayor said in relation to the $32 million.
“The cost of the unfounded liability actually went up $80 million and he restructured things to save $32 million, so it actually went up $48 million,” Merolla said. “But the way he has it written, everybody would assume it went down $32 million. Last year, we still went up from where we were before. We’re right around $800 million of unfunded liability.”
Avedisian countered Merolla’s point in an email, saying that the changes to the unfunded pension liability last year were numerous.
“First, assumptions were changed to mirror the assumptions that the state adopted,” he stated in the email. “That added to the unfunded pension liability. But then we negotiated three union contracts that lower the unfunded pension liability by more than $32 million. And now we are working on other changes to the pension plan to reduce it further.”
Merolla went on to say that overall it still increased.
“I welcome when he restructures things [but] I don’t welcome when he puts out a press release that seems to indicate that our unfounded liability went down $32 million when overall it actually went up $32 million,” Merolla said.
Also, he said the number one question every taxpayer is going to want to know the answer to is “why the mayor doesn’t want the council to have a discussion about the largest unfunded liability in the history of the city of Warwick.”
“We’re talking about how to restructure millions of dollars and for a few thousand dollars, he’s saying it doesn’t make sense?” Merolla said. “Why shouldn’t the council have the opportunity to ask the actuaries these questions? That’s the job of the City Council – to review our finances and to educate ourselves as to what the best solutions are to solve this financial crisis,” Merolla said.
Additionally, Merolla said that during budget hearings he asked the mayor’s chief of staff, Mark Carruolo, when the actuaries could come back and if the council could reschedule them again. “The mayor was right there and Mark said that wouldn’t be a problem,” Merolla said, also noting that the mayor had an opportunity to pinpoint a funding source and failed to. “He said he’d be in contact with them so they could come back.”
In a brief phone interview Monday afternoon, Carruolo said that while he doesn’t recall it being raised at the budget hearing, he does remember that Merolla drafted a resolution at some point asking for them to come back.
“I think I responded that we would check with them on their availability and as we did last time, we would try to coordinate it with a time they were going to be back in Rhode Island,” Carruolo said. “We have checked with them and we’re looking at some time in the fall.”