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By summer, when the tiny town of Central Falls (pop. 18,716) went bankrupt because its unfunded municipal pension plan was $80 million in debt--with several other Rhode Island cities dangerously close behind--public-employee pensions had become the biggest story in America's smallest state.
Caught flat-footed, the unions were slow to respond, and their efforts were paltry compared with the recent multimillion-dollar campaign to save collective bargaining for state employees in Ohio. Attendance at Raimondo's final public meeting before the vote was sparse despite union efforts to drum up a hostile crowd. Charges that Raimondo was faking the crisis by exaggerating life spans and minimizing investment returns fell wide of the mark. Union leaders accused Raimondo of being a rich woman in cahoots with Wall Street, using pensions as a springboard to higher office, and complained when a pro-business group that supported her plan, EngageRI, refused to make its list of donors public. None of it stuck. By then Raimondo was half-jokingly known as St. Gina among the capitol press corps, because she was taking on unslayable dragons. Whether the fearsome strength of Rhode Island labor unions has vanished or they are merely slumbering will be determined at the next election. As of now, the bosses look like paper tigers.
Political scientist Moakley, for one, sees the potential for a lasting shake-up of the state's rigged political deck. Raimondo is not the only young Democrat challenging the old order. Providence Mayor Angel Taveras, also elected last year, took on the teachers' union in one of his first acts. And then there is the true prince of Providence, speaker of the house Gordon Fox, perhaps the most powerful figure in state government. He too is new to his post--and the first openly gay leader of the state's legislature. The key moment in Raimondo's reform campaign, the moment it went from long shot to likelihood, was when Fox and senate president Teresa Paiva Weed put their names on the pension bill.
The plan, after some slight legislative compromises--Raimondo drew a stern line against major changes--ended cost of living increases for at least five years and tied future benefit bump-ups to the overall health of the system. It gradually raised the retirement age to mirror that of Social Security, and it converted a plan of defined future benefits for retirees into a two-headed hybrid: employees will now get a diminished guaranteed pension together with a defined-contribution plan along the lines of a 401(k). Taxpayers also took a hit, underwriting a package to refinance the pension debt. Boldest of all, the changes applied to current retirees, not just future ones. This feature, which Raimondo defends as simple fairness, is sure to draw a legal challenge from the unions, which argue that it amounts to breaking a contract.
In short, Rhode Island took a giant step in November toward fixing its financial house at the very moment that the U.S. Congress so spectacularly failed to do so. "The legislation before you is dramatic," Helio Melo, chairman of the house finance committee, told his colleagues on the last day of a special session to deal with pensions. With sometimes jeering union members watching from crowded galleries, he added, "The longer we wait, the harder it will be to fix it. Don't let it be said that we had a chance and failed."