State and Local Governments also Drowning in Debt

by Mark Rhoads

The unfunded liability of public-employee pensions in DC and Illinois is a growing problem. Some local police departments in California pay more for pensions of retired officers than they do in salaries to currently serving officers. California cannot find banks to accept its IOUs. The New York Times reports today on pension debts in the Empire State:

ALBANY — Local governments in

New York

State

face an unprecedented increase in pension costs that will force them to triple their contributions to the state pension system over the next six years, according to an analysis prepared by the comptroller’s office.

By 2015, pension costs borne by local governments upstate, on Long Island and in

New York City

’s suburbs will exceed $8 billion a year, compared with $2.6 billion last year, under the analysis, which was circulated to legislative and county leaders and obtained by The New York Times this month.

 The analysis predicts that counties will have to contribute an amount equal to nearly one-third of their civilian payrolls to the state pension system and more than 40 percent of their payrolls for police and fire departments.

 County leaders fear that the soaring contributions will put heavy pressure on their budgets as they struggle to keep up with retirement promises made in times of prosperity.

Comments

[spintreebob]

Why didn't Truth in Accounting see this in 2006?

Why didn't Rauschenberger and the FAB5 see this in 1992?

Why wasn't the warning bell sounded?

ooops, they did.

[stargirl]

the NYT is only waking up to this problem now? that's because it has been too busy worshipping at the altar of obama and writing about augusta national golf club, gay marriage, and global warming.
this is a national problem that has been brewing for well over a decade, and the pot is going to blow very soon. we the taxpayers will have to pay for it, as usual.
its more proof that government cannot be entrusted to be fiscally responsible.

[PeteSpeer]

It is not just the pension debt (which is a state requirement for public employees after the person retires, except for police and fire who are managed under a separate set on local systems.)

It is the whole panoply of municipal services which are affected. Those that have relied on the sales tax to keep the property tax burden relatively low are sucking wind -- especially those that had a cornucopia of auto dealers.

That excludes the schools who spent everything they had as fast as they could from the ever fruitful property tax which grew as property values were inflated.

Those municipalities lucky enough to be "home rule" (population of 25,000 and up) will be able to bear the burden by raising their tax rates without referendum. Those that are not will have to face their voters.

And it will get worse.