Nearly a year has passed since John Hood documented in National Affairs the fiscal crises state governments face because of long-term pension and retirement obligations.
A recent TIME magazine article describes how one state — Rhode Island — has decided to do something to get its fiscal house in order.
When the end of the fantasy came for Rhode Island–just as the end is nearing for broken pension systems in states and cities all across the country–the truth teller had her own ration of pain to bear. Gina Raimondo, a rookie politician who never got the memo about dodging tough issues, took one look at the cooked books and decided to take a stand. “It would be much easier for me just to tell you there is no problem,” the Ocean State’s general treasurer explained at a recent town-hall meeting. She chose the hard way because “this is about math, not politics,” and Raimondo is very good at math and the state’s math was disastrous. By some measures, Rhode Island’s pension problem was the worst in the country; the entire state budget for an entire year would not fill the pension hole. Raimondo has sketched this ugly picture at more than a hundred meetings since taking office in January. Slowly, the math saturated a political system founded on this simple equation: You scratch my back and I’ll scratch yours.
On Nov. 17, to the astonishment of nearly every observer of Rhode Island government, Raimondo’s crusade culminated in a vote by the general assembly to fix the system. Not “fix” it as previous legislatures have done–with nods, winks, phony accounting and fingers crossed. But fix as in repair, cure or mend. The lawmakers risked their political lives to put the Rhode Island retirement system on solid footing by raising the retirement age, tying pension boosts to the health of the fund and partially replacing guaranteed benefits with something like 401(k) accounts.
