Pensions the latest political risk for RI governor

PROVIDENCE, R.I. – In 10 months in office, Gov. Lincoln Chafee has managed to anger an impressive assortment of constituencies: business leaders and organized labor, medical marijuana advocates and critics of illegal immigration.

It's been a bumpy ride for the nation's only independent governor, who insists he's only doing what is necessary to stabilize government finances and heal the state's frail economy. But so far Chafee is winning criticism faster than compliments, a risky move for a politician without a party elected by less than half of Rhode Island's voters.

"This is a tough year — there are no surprises there," Chafee told the Associated Press during a recent interview. "This year's budget was one of the worst. ... We're facing a very difficult economy. My belief is the status quo is unacceptable here in Rhode Island. Changes have to be made."

There's no question Chafee took office during one of the most challenging times in Ocean State history. The state's jobless rate remains stubbornly high at 10 percent. The financially troubled city of Central Falls was forced to seek bankruptcy protection. A state budget deficit that once stood at $300 million led to difficult spending cuts even as the state's long-looming pension crisis further destabilized government coffers.

"This is the biggest challenge of his governorship," said Brown University political science professor Wendy Schiller. "If he fails, I think this is the end of the Chafee governorship in terms of relevance."

The former Republican U.S. senator said one of his goals as governor was to put aside partisanship and bring the state together to overcome its problems. Yet several of his highest-profile moves have succeeded in alienating constituencies large and small.

He dismayed the state's business community with a proposal to levy sales taxes on business equipment, haircuts, landscaping, non-prescription medicine and many other goods and services.

He frustrated medical marijuana supporters by blocking the licensing of medical pot dispensaries after the U.S. attorney warned that they might violate federal law.

He championed gay marriage in his inaugural address only to stand by and watch as lawmakers passed civil unions instead, a compromise that pleased neither side of the contentious debate.

He prompted calls for his resignation when he backed a plan to give in-state tuition breaks to illegal immigrants.

And now he's risking the support of organized labor — key supporters during last year's campaign — by recommending major changes to the public retirement system that could leave retirees waiting two decades for a pension increase.

Chafee has a chance to win back the support of the state's business leaders with his pension proposal, but so far, it's Treasurer Gina Raimondo who appears to be winning the praise from business groups.

Chafee received polite applause at a rally in support of the overhaul proposal last week. By comparison, Raimondo, who spoke last and longest at the rally, won loud and sustained cheers.

A recent New York Times article on Raimondo and the state's pension puzzle didn't mention Chafee.

But if the challenges of his first year in office bother Chafee, he doesn't let on.

A soft-spoken scion of an old and influential Rhode Island family, Chafee the Republican represented one of the last of a moderate Republican breed that once dominated New England politics. In the U.S. Senate, he broke with his own party to vote against the war in Iraq.

Many of Chafee's supporters said they liked his independence, his willingness to stand his ground and his interest in solutions over partisanship. But some are now say the past 10 months are making them reconsider whether they'd support him again.

"I voted for this man because I saw him vote in D.C., but I don't know who he is right now," said Ellen Lenox Smith of Scituate. The former teacher suffers from chronic inflammation and pain was angered by Chafee's decision to block the licensing of medical marijuana dispensaries after U.S. Attorney Peter Neronha warned they might violate state law. "He blew it."

Chafee said he didn't want to see federal agents raiding dispensaries and arresting Rhode Islanders, and said he wants to revise state law to ensure the dispensaries can open legally.

The same month Chafee pulled the plug on the dispensaries he angered critics of illegal immigration by backing a plan to give in-state tuition to illegal immigrants who graduate from a state high school and who vow to seek legal status. Chafee also expressed interest in giving drivers licenses to illegal immigrants.

The response was loud and immediate. Hundreds attended a Statehouse rally; some called for Chafee's recall.

"We are here to tell you, you are the governor, not a dictator," John DePetro, a talk-radio show host at WPRO and master of ceremonies, said to cheers. "Gov. Chafee, you are not the king of Rhode Island!"

DePetro has referred to Chafee as "Gov. Gump," a sobriquet echoed in an advertisement on the side of Providence tourist trolleys: "Dump Gov. Gump."

Chafee defended the policy, arguing that educating immigrants who want to become legal residents will help the economy without costing the state a dime. He said it's a key priority for the state's growing latino community, and that the criticism is misplaced though explainable.

"I know what a hot button issue this is, especially in a bad economy," he said. "People are just angry and stressed out."

Schiller, the Brown University professor, said most Rhode Islanders believe Chafee's "heart is in the right place."

"People like the guy; they're just not sure he's doing a good job," she said.

Public pensions may offer Chafee a path toward greater relevance, but he risks angering labor unions, public retirees and state workers — a highly influential group in the Statehouse.

The Chafee-Raimondo plan would raise retirement ages for most public workers, suspend automatic cost-of-living pension increases for an estimated 19 years for most workers, and create a new hybrid system that combines traditional pensions with 401(K)-style retirement savings accounts.

The proposal aims to save $3 billion over the next decade. If nothing is done, Chafee and Raimondo say pension costs will swamp state and local governments, prompting tax increases and cuts to schools, infrastructure and other programs and services.

Hundreds of public workers have voiced their opposition to the plan.

"He had an awful lot of friends," said J. Michael Downey, president of Council 94, the state's largest public-sector union. "They're certainly going to be reconsidering that friendship should this bill go forward."

One of Chafee's allies is standing firm. The Rhode Island Alliance of Social Service Employees endorsed Chafee last year and President Philip Keefe said that despite his pension proposal, he's not yet willing to call the endorsement a mistake.

"I'm not ready to throw him overboard yet," Keefe said. "I had a conversation with him, and he's listening to our concerns. I'm not ready at this point to throw in the towel."