Judge Taft-Carter’s decision in the Providence Medicare case on Monday contained this rather odd passage:
“Moreover, the Court notes that $6 million in lost savings – although hardly a paltry sum – is less than 1% of the City’s approximate $1.5 billion in liabilities for non-pension post-retirement employment benefits. Immediate receipt of these alleged savings would not save the City from financial ruin.”
That’s an apples-to-oranges comparison. The $6 million is how much the city projects it will save from moving retirees to Medicare in one fiscal year. The $1.5 billion is how much the city projects it owes them in health benefits forever.
In retrospect, Taft-Carter’s rationalization looks even more mistaken. Providence faced a cash flow crunch last winter – an insolvency crisis – and the $6 million absolutely was desperately needed. It’s worth watching how she deals with the accounting issues in the state pension case.
The headline on this item has been updated.