Mayor Allan Fung got one step closer to enacting municipal pension reform last Thursday with the unanimous support of the Cranston City Council’s Finance Committee. It appears, however, that the hardest battle is yet to come, as retirees pledge to fight the agreement in court.

“There is a brewing storm in connection with these ordinances,” said Attorney Patrick Sullivan, who says he represents “dozens” of Cranston Police and Fire retirees. “We plan, if these ordinances are enacted, to challenge them.”

Paul Valletta, president of the firefighters union, represents active firefighters but not retirees. He said that his union is in support of Fung’s plan, which would cap Cost of Living Adjustments (COLAs) at 3 percent compounded annually, as opposed to the minimum 3 percent previously set. Starting July 1, retiree COLAs would be frozen every other year over 10 years. During years 11 and 12, retirees would receive a reduced 1.5 percent compounded COLA. The plan would lastly re-amortize the city’s liability from its current schedule to a 30-year period.

When taken together, Fung believes these efforts would immediately save $6.5 million in the upcoming fiscal year and get the city’s pension fund out of critical status within 10 to 15 years, fixing the system entirely in 30 years.

Despite Valletta’s support, it appears litigation is inevitable.

“Anyone can give away what they want, but no one has the right to take anything away from me,” said retired firefighter Vincent Matrumalo. “We have no collective bargaining to do anything positive to our contracts.”

Matrumalo attended meetings while the city tried to work out an agreement with the unions and retirees, and said he does not feel any viable alternatives were offered.

“No other plan, throughout all these meetings, was discussed – just givebacks from retirees,” he said.

He suggested cuts in the city’s budget as an alternative, and questioned why a tax increase was off the table entirely.

“In my opinion, the General Fund is my pension fund. Our pensions are paid through the General Fund, so I don’t understand why this pension fund needs to reach some magical number in order to make this situation better,” he said.

Matrumalo went on to advise the committee to start putting money aside to pay for the pending lawsuit for “when we win this case.”

The Finance Committee was undeterred by the threat of legal action. They voted 7-0 to approve both ordinances. Council members Steve Stycos, Michael Farina, Sarah Kales Lee, Don Botts, Paul Archetto, Mario Aceto and John Lanni all sit on the committee.

Councilman Michael Favicchio does not sit on Finance but urged his colleagues to pass, so the full council could consider the reform package.

“I think they’re necessary at this time,” he said of the changes, adding that they are “not as deadly” as some people have suggested. “We’re not destroying pensions; these are very minor adjustments.”

The average pension in Cranston is $50,000; for retirees under the age of 65, they get an additional health care package worth $18,000.

“I don’t think the average person in the city of Cranston makes anywhere near that kind of a pension and I don’t think we’re asking too much to say, ‘we have to revise this,’” Lanni said. “I think what the mayor is asking is fair. I’m sure nobody sitting here likes the idea, but it’s fair – it’s fair to the taxpayers and in the long run, it’s fair to you, too.”

Responding to claims that the council is taking the easy way out by voting in favor of the plan, Councilmen Botts and Stycos both said the decision was a difficult one.

“This is not an easy vote. Obviously this council and this administration has been handed a bag that has been years, decades in the making. The chickens have come home to roost,” Botts said.

Stycos shared a story about his own family. His grandfather came to the United States from Turkey “with $100 in his pocket and a couple of oranges,” and started a tailor shop. When his uncle decided to start a restaurant, Stycos’ grandfather, also named Steve, signed the loan. Ultimately, the uncle took off and left the grandfather with a $5,000 note in the middle of a Depression. It took years to pay off that loan, with Stycos’ family sleeping in the kitchen in order to take in boarders.

“To me, when you owe something, you should do everything you can to pay it off. The problem I have with this is, frankly, I don’t see an alternative to what’s being proposed,” Stycos said.

“It makes me very angry to vote for it,” he added, blaming past administrations for not funding the pension system, though giving credit to former Mayors Steve Laffey and Michael Napolitano, as well as Mayor Fung, for trying to fix the problem.

The full City Council will consider the ordinances at their next scheduled meeting on Monday, April 22 at 7 p.m.

In other council action, the Finance Committee voted 5-2 to ratify a contract with the city’s Laborers union, with Councilman Stycos and Councilwoman Lee voting against it.

The contract most notably moves LIUNA into a defined contribution retirement system. Defined contribution 401(k)-type plans allow municipalities to better predict costs, and therefore improve budgets and future outlooks.

The plan applies to new hires and those workers who have been with the city for less than five years, and are therefore not vested in the state pension system. These employees will utilize the same system as the Teamsters union, making the transition easy, as that plan is already up and running.

“I think it was a very fair contract for both employees and taxpayers in this city,” said union president Arthur Jordan. “We’ve always been a good partner to the city and the taxpayers.”

LIUNA began paying health care co-shares in 1995, at a time when many other unions were not paying in for insurance. The majority of members continue to pay 20 percent, and employees hired in 1995 or earlier increase contributions to 15 percent under this agreement.

The union has also made concessions during past fiscal crises, a fact that was not overlooked by the council.

“The Laborers have given up so much over the past six years ... and continue to give up. I’d like to thank the Laborers for doing their part,” said Council Vice President Farina.

While there are significant long-term savings by making design changes to the pension plan, the agreement worked out by Mayor Fung includes raises as a way to offset the concessions. In year one, members would receive a 55-cent raise per hour; in year two, 60 cents; in year three, 70 cents.

Stycos does not support giving out raises, nor does Lee, who said she would prefer some kind of performance-based raise as opposed to across the board increases.

“Over three years, there will be $800,000 more spent on this contract than if things were left as they are,” Stycos said. “Although I concede the pension agreement is certainly a cost savings, I think the contract is too rich.”

Botts disagrees, quoting Stycos from a March 28 meeting at which he noted people are judged by how they treat “the least among us.”

“Three percent does seem like a large number until you really look at the numbers,” he said, pointing out that these union members are among the lowest paid employees in the city.