In Providence pension trial, former Mayor Taveras defends changes to retiree benefits

Former Providence Mayor Angel Taveras testifies in court.

PROVIDENCE, R.I. (WPRI) – Repeating comments he has made countless times in recent years, former Providence Mayor Angel Taveras on Tuesday outlined the steps his administration took to address a financial crisis he claims was “a lot more severe” than he was led to believe before he took office in 2011.

During about 90 minutes of testimony involving the retirees who opted out of a 2013 pension settlement with the city, Taveras said he even asked a lawyer to look at whether Providence should file for bankruptcy, but maintained he considered the action a last resort.

“I thought bankruptcy would be devastating to both the city of Providence and the state of Rhode Island,” Taveras, a Democrat who ran unsuccessfully for governor in 2014, said.

Instead, Taveras said, the city chipped away at a projected $110-million structural deficit in part by requesting more state aid, closing schools, raising taxes, convincing the city’s nonprofit colleges and hospitals to increase their payments in lieu of taxes by more than $6 million annually, and, of course, reaching a settlement to alter retirement benefits for former city workers.

While the vast majority of retirees agreed to the settlement – which froze 3% COLAs for 10 years, eliminated 5% and 6% COLAs forever, shifted how pensions are calculated and moved retirees over the age of 65 to Medicare – a group of 68 former public employees filed suit against the city in November 2013.

The trial in that case is now in its third week and Taveras was the first witness called to testify by city lawyers William Dolan, William Wray and Nicholas Nybo. He is scheduled to face cross-examination on Thursday.

Taveras, who now works as an attorney at Greenberg Traurig LLP, recalled in detail the exact moment when he learned Providence was projecting a $110-million structural deficit for the 2011-12 fiscal year, the first budget he was tasked with crafting.

He said Michael D’Amico, the city’s former director of administration, came to him on the afternoon of Feb. 25, 2011, hours before they were scheduled to attend the annual Providence Newspaper Guild Follies comedy show and less than two months after Taveras had been inaugurated. Taveras claimed D’Amico told him, “I can’t fix this.”

Later that night, Taveras said, he met D’Amico at Aruba Steve’s, a now-closed watering hole located two blocks from City Hall, to console his top aide.

In the months that followed, Taveras announced he cut his own pay by 10%, laid off between 13 and 15 non-union employees, reduced the size of his staff and met with state officials to discuss Providence’s finances. The larger changes, including the retirement benefit alterations, were first approved through ordinances passed by the City Council, but later agreed to in a settlement.

Asked why he didn’t raise taxes in every budget in order to address the shortfall, Taveras said he didn’t believe annual tax increases would help residents in a city that still had an unemployment rate above 10%. (He did raise taxes twice in four years.) He said the city also ruled out a pension-obligation bond because “it just shifted who we owed the money to.”

Taveras was also asked whether he considered selling the Providence Water Supply Board, a question that will likely be revisited during the cross-examination this week. Taveras said the city’s law department believed any proceeds from the sale of the water supply board would need to go back to ratepayers, not the city.

The trial will continue Wednesday with testimony from D’Amico and Councilman David Salvatore, who chaired a committee tasked with studying the city’s pension system in 2012.

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Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Facebook and Twitter: @danmcgowan

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