[Home]  [Headlines]  [Latest Articles]  [Latest Comments]  [Post]  [Mail]  [Sign-in]  [Setup]  [Help]  [Register] 

The Spooks And The Hacks: Why Do They Hate Russia?

Sheriff Tries to Expose List of 300 Bad Cops, Courts & Union Promptly Block Him

Trump Gets Ready to Pick John Bolton as Advisor

BREAKING : Make France Great Again! Le Pen SOARS in French Polls

BREAKING : Another Trump Promise Kept! 10k New Immigration Officers Coming Soon!

‘PESD’ Is PTSD For Dems Who Can’t Stop Crying Over The Election

Nearly 2 million non-citizen Hispanics illegally registered to vote

New Ping list,2020 The Likely Suspects

Court docs: Dentist had several drinks at his office before hit and run that injured teen

BREAKING VIDEO : Kasich Joins McCain in Defending Liberal FAKE NEWS Media

From auction block to handcuffs: How a local couple was jailed after a legal purchase

BREAKING : Chelsea Clinton Attends Islamic Anti-Trump Protest

BREAKING : Trump Says “You’re FIRED!” to Backstabbing White House Aide

NEW REPORT : #NeverTrumper Katie Walsh is the Source of White House Leaks

John Kelly Signs Powerful Directive to Fast-Track Deporting of Illegals

Shia Labeouf Insane Rant @ "He Will Not Divide Us" Albuquerque New Mexico 2/18/17

A Big Shoe Just Dropped

Leaked Emails: Dem State Leaders Think Obama’s New Organizing Army is ‘Grade A Bullshit’

Lawmakers probe US funding for Soros groups, left-wing causes in Europe

Donald Trump’s Comprehensive Border Reforms Kill Obama’s Pro-Migration Policies

Meet the Depressed host Chuck Todd and John McLunatic/Leon Panetta discuss Trumps incompetence

Rand Paul: Trump’s Just ‘Expressing His Opinion,’ I’m Not Seeing Any Efforts to ‘Limit the Press’

The Dentist Who Injected Semen into Patients' Mouths Tried to Reopen His Clinic in Belize

Dentist indicted on charges of orally raping a male patient while he was on laughing gas

What I learned about Exxon CEO Rex Tillerson after spending a week on jury duty with him

Elderly woman rescued from home after becoming ‘molded’ to chair for nearly a year

How the Media Markets FAKE NEWS to Different Parts of the Country

Observations Concerning the Increase of Mankind

This Grieving Wife Posed For a Heart-Wrenching Maternity Shoot. Then Look Who Shows Up…

For the First Time in Years Republicans Outnumber Democrats

Major Obama Gun Regulation is FINALLY UNDONE!

BREAKING NEW POLL : Voters Trust Trump More than the Media

Cop Fired Over Tirade At Traffic Stop Once Allegedly Threatened To ‘Blow Up’ A School

Pablo Escobar’s Son Reveals His Dad “Worked for the CIA Selling Cocaine” — Media Silent

Trump may not make it four years: Former intelligence operatives confirm “hit job” on Michael Flynn

Liberals now actively protesting in SUPPORT of the police state

Hillary Clinton Is Running Again - Here’s the proof.

Two Cheers For Trump Advisor Mike Anton—He Has The Right Enemies

BREAKING : Secretary of State Rex Tillerson Cleaning House at State Dept. “It’s a BLOODBATH!”

BREAKING VIDEO : Fox News Shepard Smith Goes BAT-SH*T CRAZY on Air

Thanks, but no thanks (Vice Admiral Harwood fires Trump)

BREAKING : New Analysis shows Trump’s Border Wall Will Pay For Itself!

BREAKING NEW POLL : Trump’s Approval Rating Soars!

Land of the “Free”: More US-Born Americans Detained at Border, Asked for “Papers Please” as “Liberty Lovers” Call for an Even Bigger Police State

The Neocons and the “Deep State” have neutered the Trump Presidency, it’s over folks!

Pat Buchanan: The Deep State Targets Trump

Journalists Whisper at Trump’s Crazy Press Conference: ‘This Is Insane’

BREAKING: NH State Representative Joins Libertarian Party – Press Conference Video

Trump Signs Repeal Of Obama Coal Mining Regulations

Day Without (Illegal) Immigrants Would Save America $351 Million: So Much For #DayWithoutImmigrants


Status: Not Logged In; Sign In

United States News
See other United States News Articles

Title: How Retirement Benefits May Sink the States
Source: WSJ.com
URL Source: http://online.wsj.com/article/SB100 ... 0.html?mod=WSJ_Opinion_LEADTop
Published: Apr 30, 2012
Author: STEVEN MALANGA
Post Date: 2012-04-30 06:17:45 by CZ82
Keywords: None
Views: 1141
Comments: 2

How Retirement Benefits May Sink the States

Illinois is a lesson in why companies are starting to pay more attention to the long-term fiscal prospects of governments..

By STEVEN MALANGA

Chicago Mayor Rahm Emanuel recently offered a stark assessment of the threat to his state's future that is posed by mounting pension and retiree health-care bills for government workers. Unless Illinois enacts reform quickly, he said, the costs of these programs will force taxes so high that, "You won't recruit a business, you won't recruit a family to live here."

We're likely to hear more such worries in coming years. That's because state and local governments across the country have accumulated several trillion dollars in unfunded retirement promises to public-sector workers, the costs of which will increasingly force taxes higher and crowd out other spending. Already businesses and residents are slowly starting to sit up and notice.

"Companies don't want to buy shares in a phenomenal tax burden that will unfold over the decades," the Chicago Tribune observed after Mr. Emanuel issued his warning on April 4. And neither will citizens.

Government retiree costs are likely to play an increasing role in the competition among states for business and people, because these liabilities are not evenly distributed. Some states have enormous retiree obligations that they will somehow have to pay; others have enacted significant reforms, or never made lofty promises to their workers in the first place.

Indiana's debt for unfunded retiree health-care benefits, for example, amounts to just $81 per person. Neighboring Illinois's accumulated obligations for the same benefit average $3,399 per person.

Illinois is an object lesson in why firms are starting to pay more attention to the long-term fiscal prospects of communities. Early last year, the state imposed $7 billion in new taxes on residents and business, pledging to use the money to eliminate its deficit and pay down a backlog of unpaid bills (to Medicaid providers, state vendors and delayed tax refunds to businesses). But more than a year later, the state is in worse fiscal shape, with its total deficit expected to increase to $5 billion from $4.6 billion, according to an estimate by the Civic Federation of Chicago.

Rising pension costs will eat up much of the tax increase. Illinois borrowed money in the last two years to make contributions to its public pension funds. This year, under pressure to stop adding to its debt, the legislature must make its pension contributions out of tax money. That will cost $4.1 billion plus an additional $1.6 billion in interest payments on previous pension borrowings.

Business leaders are now speaking openly about Illinois' fiscal failures. Jim Farrell, the former CEO of Illinois Toolworks who is heading a budget reform effort called Illinois Is Broke, said last year that the state is squandering its inherent advantages as a business location because "all the other good stuff doesn't make up for the [fiscal] calamity that's on the way." Caterpillar, the giant Peoria-based maker of heavy construction machinery, made the same point more vividly when it declined in February to locate a new factory in Illinois, specifically citing concern about the state's "business climate and overall fiscal health."

California is another place where businesses have come to view three years of budget uncertainty and huge pension liabilities (not to mention the state's already high taxes and complex regulatory regime) as an inducement to migrate elsewhere. The state and its municipalities already face unfunded pension bills that now top $500 billion, according to studies by Stanford University's Joe Nation, and several of the state's cities, including Stockton in the Central Valley, face the prospect of insolvency.

Executives at Stasis Engineering, a formerly Sonoma, Calif.-based auto design firm that left the state for West Virginia in the midst of an unfolding budget crisis in 2009, told the Press Democrat newspaper that the "budgetary bedlam gripping Sacramento" seemed to portend, as the paper characterized the company's concerns, "a future filled with tax increases and service cuts." More recently, in December 2011, Ron Mittelstaedt, the chief executive of Waste Connections, a recycling company formerly based in Folsom, Calif., told the press that the state's "structural [budget] mess" was a contributing factor in its decision to relocate to Texas.

Meanwhile, Oakland Tribune columnist Daniel Borenstein notes that his city has levied what he calls a "hidden pension tax" on property owners for decades to pay off a municipal pension fund that went bust in 1976. Today, the average Oakland home with an assessed value of $266,267 pays an additional $419 a year in property taxes to finance the benefits of the defunct system, Mr. Borenstein estimates, while a home assessed at $1 million pays an added $1,575 in taxes.

Bigger bills will fall due elsewhere. Earlier this year, the Massachusetts Taxpayers Foundation examined unfunded retiree health-care liabilities in 10 midsize municipalities, including Worcester and Springfield, and found the debt averaged $13,685 per household. To pay those commitments over 30 years would require adding $565 a year to property tax bills on average, the group estimated. In one community, Lawrence, the tab was $1,209 annually, a 50% increase over current taxes.

Back in Illinois, Dana Levenson, Chicago's former chief financial officer, has projected that the average city homeowner paying $3,000 in annual property taxes could see his tax bill rise within five years as much as $1,400. The reason: A 2010 Illinois law requires municipalities to raise the funding levels in their pension systems using property tax revenues but no additional contributions from government employees. The legislation prompted former Chicago Mayor Richard Daley in December to warn residents that the increases might be so high, "you won't be able to sell your house."


Poster Comment:

Looks like Leftardism is about to crash in a big way.... Wonder how many union bosses will go broke over this???? (None..... that's the taxpayers job).....

Post Comment   Private Reply   Ignore Thread  


TopPage UpFull ThreadPage DownBottom/Latest

#1. To: CZ82 (#0)

Don't worry. States are gutting pensions worldwide now.

The US isn't immune.

Besides, Vioxx killed off over 500 000 65+ aged in a 6 year period.

That saved beaucoup bucks...;}

mcgowanjm  posted on  2012-04-30   9:32:13 ET  Reply   Trace   Private Reply  


#2. To: CZ82 (#0)

Jerry Brown is trying to raise taxes in California to pay for lavish retirement benefits for government bureaucrats. of course, he claims that the money is going towards "education". No, it's going to pay for retire school teachers and won't do a damn thing for education.

Most of the private sector has moved away from defined benefit plans to defined contribution plans.

Federal, state and local government must do the same, before the whole country goes belly up from paying people not to work.


Iran’s main drive for acquiring atomic weapons is not for use against Israel but as a deterrent against U.S. intervention -- Major General Zeevi Farkash, head of the Israeli Military Intelligence Directorate

jwpegler  posted on  2012-04-30   10:05:53 ET  Reply   Trace   Private Reply  


TopPage UpFull ThreadPage DownBottom/Latest

[Home]  [Headlines]  [Latest Articles]  [Latest Comments]  [Post]  [Mail]  [Sign-in]  [Setup]  [Help]  [Register] 

Please report web page problems, questions and comments to webmaster@libertysflame.com