Brian Kennedy
REVENUE STREAMS FOR FUNDING COLA RESTORATION
I would urge that this testimony would be appropriately placed in the January 31, 2024 "Meeting Materials." That PAWG meeting will begin the examination of the costs of the various options/proposals, and this testimony will identify avenues for funding the options for immediate full COLA restoration.
(1) RIPEC (headed by PAWG Co-Chair DiBiase) has submitted a Jan. 13 position paper which uses RI Budget data for revenue projections. Their estimate is a 3% increase/yr. for the next four years. Extending that (conservative) projection through ten years, the inflation-protected (e.g. sales and income tax) state revenue will increase by over 30% at the conclusion of ten years.
This inevitable revenue growth can be allocated to COLA restoration (via long delayed increases in the ARC), rather than exclusively directed towards the inflationary spending habits of existing government programs. (N.B. The $3 billion in "savings" from pension "reform" has already been diverted to existing programs. These "savings" do not actually exist.)
(2) Earmark the new marijuana tax to the Pension Fund.
(3) Modify the "current service level" budget model. Government agencies submit budget requests based on the funding needed to provide last year's services (NOT what can be done with last year's funding). This creates a "baked in" inflationary factor.
Reduce this calculation (by 1%?) and divert that funding to the Pension Fund. That still provides an annual increase for all government programs, and creates a new revenue stream for the Pension Fund.
(4) Authorize Pension Obligation Bonds for COLA restoration, which has been previously suggested in the Senate. Unfortunately, this borrowing won't engender a ribbon cutting or "Shovel Opportunity," but it's the right thing to do. If the Governor wants to add $20,000 to everyone's income by 2030, he'd best back out the retirement incomes of ERSRI members from that calculation. Those numbers will have decreased by over 50% by that time with the current formula.
Brian Kennedy
Advocates for COLA Restoration and Pension Reform
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