Providence, Rhode Island, asks retirees to accept less By Edith Honan PROVIDENCE, Rhode Island (Reuters) - Angel Taveras, the mayor of Rhode Island's capital of Providence, on Saturday painted a dire fiscal picture of his city: by this summer, it could run out of money. "What we're trying to avoid is us falling off a cliff," Taveras said in an interview as he described Rhode Island as a "city-state" where livelihoods depended on the capital. Earlier in the day, Taveras said he met with about 475 city retirees to ask them to give up annual cost-of-living increases on their pensions to help Providence ward off bankruptcy. The most of the Providence retirees, many with white hair, promised a fight. We've been very prudent. We've been looking forward to retirement and basically now we can't sleep at night," said Linda Walden, 60, whose husband retired from the Providence fire department in 2009. It's difficult to get a job after age 60. Trust me, my husband looked," she added. The retirees had gathered to hear Taveras and his chief of staff Michael D'Amico explain how Providence, with an annual budget of about $613 million, had ended up with a $110 million budget gap and a $900 million unfunded pension liability. In a nutshell, the officials said, city had spent too much and promised city workers retirement packages that were more generous than the city could ever sustain. The city had also failed to put aside the money needed to fund its promised benefits. Now, Taveras said, Providence risks going the way of Central Falls, the tiny Rhode Island city just six miles from the capital that in August filed for bankruptcy last August largely due to its enormous pension debt. As pension and retiree health costs rise in cities across the country, hard-pressed mayors have used the threat of a Chapter 9 bankruptcy filing to extract concessions from public worker unions and retirees. But actual filings have been rare. Since taking office a year ago, Taveras, a Democrat, has approved a ten percent tax increase, cut 200 city jobs, renegotiated labor contracts and closed several public schools. Also, in a capital city where about half of the land is exempt from property taxes because it is owned by not-for-profit colleges, hospitals and government entities, Taveras has asked such institutions to voluntarily pay the city more money. He is asking Brown University, which now pays about $4 million to the city every year, to about double that amount. Brown has an endowment of $2.5 billion. Taveras said he and Brown's president Ruth Simmons have been meeting regularly to reach an agreement. "I'm seeking budget relief," Taveras said of his appeal to the non-profits. Regardless of how those negotiations turn out, Taveras said the city's pension deals are not sustainable. "Honestly, this is structural," he said. The mayor has proposed suspending cost of living benefit adjustments, which range from three to six percent for some workers, until the pension is funded at seventy percent -- a goal that could take 20 years to reach. But he said the city has no plans to reduce retirees' current pension payments. Retirees have until March 25 to appoint a steering committee to negotiate with the city, Taveras said. The committee and the city will then have until May 1 to reach am agreement. Many retirees objected that they were being lumped together, even though some take home enormous pensions compared to others, and certain government workers also "double dip" into more than one pension account. One example, according to the city: a former fire chief, who earned $70,496 at the time he retired, now receives a $196,813 annual pension, and, with regular cost of living increases, could be paid $800,000 by the time he reaches the age of 100. Many Providence retirees receive a pension of less than $50,000, the city said. One retiree, who declined to give his name to reporters, told Taveras it was "insanity" the city was seeking only to freeze generous pensions, while denying relatively modest increases for other retirees. The mayor did not directly respond to a questioner who asked what he planned to do to prevent public officials from collecting more than one pension. Steve Day, a 63-year-old retired firefighter, said he sympathizes with the mayor but said the proposal was fundamentally unfair to retirees. "You know, I'd give money back if they gave me some of the time back that I didn't spend with my family," said Day, who said his pension totals 75 percent of his former salary, without including overtime payments. "I did my end of the deal," he said.