PROVIDENCE — Incensed that Providence officials have helped state Sen. Stephen Alves, D-West Warwick, put together a sweeping statewide package of pension changes, the business manager of Local 1033 of the Laborers’ International Union is pulling out of ongoing pension reform talks with the city and says the union will sue if Providence tries to unilaterally change pension rules.

The city and the union have been working together to make incremental changes to the badly underfunded pension system for the past several years. But in a letter to City Council members and officials of other unions sent this week, Local 1033 Business Manager Donald S. Iannazzi said he learned that Providence was working with Alves to help him draft his pension-change package, and he’s done talking pensions with the city as a result. Iannazzi sees Providence’s involvement with Alves as betrayal.

“What fools we have been!” Iannazzi’s letter proclaims. “Kindly accept this writing as notice that Public Employees’ Local Union 1033 shall no longer participate in deliberations to modify any provision of the Employees’ Retirement System of the City of Providence.”

It later refers to “secret” meetings between the city and Alves, and states that “the underlying purpose was to camouflage the city’s true intent of diverting our attention and focus while a political backroom deal was made with no input from the members of the system.”

The city’s chief of administration, Richard I. Kerbel, acknowledged that at Alves’ request, he had met with Alves on four or five occasions in the last few weeks and provided data about the city’s retirement system. But he said that Iannazzi’s characterization in the letter that the city was involved in drafting the package is untrue.

“I provided technical support, facts and figures about the city pensions system. Union contracts. Senator Alves led this process. Senator Alves deserves full credit for the legislation. But, controlling pension costs, controlling municipal costs has always been a mission of the mayor to protect the taxpayers. When asked by the head of the Senate Finance Committee to provide information, we provided information,” Kerbel said.

Kerbel said that Mayor David N. Cicilline was aware of the talks, but was not involved in the sit-down discussions.

Iannazzi tore into Kerbel, saying that this would not have occurred if Kerbel’s predecessor, John C. Simmons, was still involved.

“Simmons would not do this … I think it’s amateur hour over there,” Iannazzi said. “I don’t believe it’s the mayor, I just don’t believe that there’s anyone who appreciates the ramifications of this act.”

Alves yesterday confirmed Kerbel’s account, saying that the city was involved in an advisory role, not in molding the intent of the bill.

“I did speak with the mayor and ask him if he’d give us the information,” Alves said. “We were working on what we’d like to see in the bill; they were giving us numbers.”

Alves said he has also requested information from his home town of West Warwick, but that no city has been as involved as Providence.

Alves’ package has been met with anger by state labor leaders, both for its contents and because labor believes that pension changes should be decided through negotiations, not through state legislation.

Alves’ package would apply to municipal employees not currently in the state-run Municipal Employees’ Retirement System of Rhode Island.

It would establish minimum retirement ages for municipal employees, and reduce retirement benefits for municipal employees with less than 10 years of service. It would cap annual pension increases at a simple 3 percent per years. And it would introduce restrictions stipulating that police and firefighters must be at least 55 years old with 25 years of service to qualify for a full pension, while non-public safety employees would need to be 59 with 29 years on the job for a full pension. Retiree health-care benefits would begin only at age 55, and would expire when the retiree becomes eligible for Medicare.

Alves is still putting the finishing touches on his bill and said that he expects to submit the legislation at the end of next week.

The City Council has been working with the city’s unions for the last two years to reform the city’s pension system, which has nearly $700 million less than it should in assets to pay off all the benefits owed to former and current employees.

In the past year, the council has approved changes to the pension system that require disabled retirees receiving pensions to periodically recertify their disabilities; require disabled retirees to submit their income tax information, and reduce their pensions if they hold a second job and earn more than the salary for the position they previously held with the city; and convert retirees receiving disability pensions to often less-generous “service” pensions once they reach retirement age.

It also removed a firefighters-only benefit known as “Option 4” that allowed city firefighters who qualify for a disability pension to retire with their pension, tax-free, and then take back the money they have contributed to the city pension fund, plus interest.

City Council President Peter S. Mancini said the council didn’t know that Kerbel was talking with Alves, and that council members are unhappy with the situation — and displeased that their pension reform efforts may now be over as a result.

“The biggest problem is that they didn’t inform anyone. How can you talk about pension reform and find a solution if you don’t have all the parties involved?” Mancini said.

If a solution can be worked out and the union tempted to rejoin the pension reform talks, Mancini said, he’s hopeful the city administration will understand the need to inform the council of what it’s doing.

“I hope they realize that we have to be part of this going forward,” he said.

Kerbel said that it wasn’t his place to notify the council members, the union, or anyone else.

“It’s up to Senator Alves to decide who he wanted to communicate with at which time. It wasn’t the city that was controlling this process. The city was providing support,” Kerbel said.

Talks are also under way between Local 1033 and the city on a contract for the current fiscal year and the following two years. Both Kerbel and Iannazzi said it remains to be seen how this incident will affect negotiations, though Iannazzi said that this one moment “negates the years of labor relations progress we have enjoyed.”

Kerbel said that, considering Cicilline’s commitment to finding solutions to fix the pension system, he’s not sure the city would do anything differently if it had to do it over.

“The mayor has been concerned about pension costs since day one. I think tomorrow if there was another group formed on pension reform, the mayor would want us to be at the table,” he said.

dbarbari@projo.com