- Retired police and firefighters from Central Falls, R.I., have agreed to sharp pension cuts, a step thought to be unprecedented in municipal bankruptcy and one that could prompt similar attempts by other distressed governments.
If approved by the bankruptcy court, the agreement could be groundbreaking, said Matthew J. McGowan, the lawyer representing the retirees.
“This is the first time there’s been an agreement of the police and firefighters of any city or town to take the cut,” he said, referring to those already retired, who are typically spared when union contracts change. “I’ve told these guys they’re like the canary in the coal mine. I know that there are other places watching this.”
As cities, towns and counties struggle with fiscal pain, there has been speculation that they could shed their pension obligations in bankruptcy. Some have said it might, in fact, be easier for local governments to drop those obligations than it is for companies, which use a different chapter of the bankruptcy code.
Granted, this is a agreement, probably one of those "all or nothing" type deals that forced the retirees to take what they could get so they didn't end up with a court battle that might net them nothing at all.
You can bet the bank Rahm has already run some of these numbers and is watching the outcome of this very closely.
You can bet the bank Rahm has already run some of these numbers and is watching the outcome of this very closely.