More bad news about the states' fiscal positions

Steve Malanga of the Manhattan Institute points out some more problems for the states (from yesterday's Wall Street Journal):

According to Pew [Charitable Trusts' Center on the States] estimates, states have put aside a mere $11 billion to fund $381 billion in future nonpension benefits. Illinois, which has the largest percentage of unfunded pension liabilities among the states, actually cut its contributions to pension funds by $2.3 billion in the flush years of 2006 and 2007 as stock market returns were rising.

Taxpayers are often erroneously told that there's plenty of money to finance new perks. In the late 1990s, to take one example, California's legislature approved a series of pension enhancements which the California Public Employees' Retirement System predicted could be funded almost entirely out of stock market gains. Today, of course, major stock market indices are lower than they were in 1999. California state and local governments are paying some $12.8 billion a year to finance public employee pensions, up from $4.8 billion in 1999, according to the U.S. Census Bureau's survey of government expenditures.

There's more. If you have a strong stomach, read the whole thing.

Comments

[JorgXMcKie]

One of my Public Budgeting grad students just last night angrily told me that "the government" (in her case a county government) has a "legal obligation" to pay her promised pension.

When I asked her where the money was supposed to come from (and gave her the examples here in Michigan of Highland Park and Hamtramck, which both totally defaulted on their pensions) she only got more angry. There *must* be a pony in all that horse manure, they *promised*.

It's sad, really sad.

[jorod]

Yoose guys better cough up...Now that Chicago has $15 billion for O'Hare Airport, we need another $9 billion for the Chicago Transit Authority (including $50 million for pensions) and we need another $10 billion for the Olympics...

That's the Chicago Way. God Bless Obama!!!

[EclectEcon]

This is all so VERY frightening.... Despite the recent data, how can we NOT expect more inflation in the future?