July 21, 2011

RI Residents Feel Sticker Shock When Paying for the Cost of Local Government

Eileen Norcross

Senior Research Fellow

While Center Falls, Rhode Island, has recently made headlines with its inability to pay out pension promises, another Rhode Island city, Cranston, is also facing serious budget issues and is in need of pension reform.

As with Rhode Island's state and many of its municipal pension plans, the problems are the same. Expensive benefits were negotiated and not enough money was set aside.

The high costs of local governments are now being felt across the state, as Rhode Island residents are being hit with bigger bills.

Car owners in many municipalities now pay higher excise taxes since the state lowered the allowable exemption from $6000 to $500. Broadening the tax has led to sticker shock for residents over the fast growing bills in their state and local governments. With an unfunded liability of over $12 billion in a state with a $7.7 billion budget, Rhode Island's Treasurer Gina Raimondo is calling for drastic changes, including higher retirement ages, reduced benefits, and suspended COLAs.