Skip to comments.U.S. munis face $2 trillion in unfunded pension costs
Posted on 07/03/2012 8:28:55 AM PDT by DeaconBenjamin
U.S. states and localities have more than $2 trillion of unfunded pension liabilities, Moody's Investors Service said on Monday, citing data on plans offered by 8,500 local governments and over 14,000 individual entities.
The total liabilities for fiscal 2010 were more than three times the amount reported by local governments. "Pension liabilities are widely acknowledged to be understated," Moody's Managing Director Timothy Blake said. Most state fiscal years end on June 30.
The rising cost of public pensions has strained finances for cities around the country. Stockton, California, which last week became the biggest U.S. city to file for Chapter 9 protection, plans to cut employee compensation and retiree benefits by $11.2 million to help close its deficit.
Public pension benefits have become a flashpoint in elections around the country. Since 2009, at least 43 states have tried to rein in costs. But many states spread the savings out over long periods.
Moody's seeks public comment through the end of August on four major changes it plans to make in how it treats pension liabilities. The negative impact of the modifications - to taking effect in the fall - will hit counties, cities and towns, and school districts most heavily - unless Moody's significantly alters them.
"Moody's expects the proposed pension adjustments to result in rating actions for local governments where the effect is outsized relative to their rating category, but no state rating changes are expected solely as a result of pursuing the adjustments now under consideration."
Cities and counties are likely to see downgrades, Blake said.
Some liabilities in state pension plans that also cover localities will be allocated to the specific local governments. Currently, some of those liabilities might not be broken out by the individual city, town or school that is part of a state plan.
(Excerpt) Read more at reuters.com ...
You can only use someone else’s money for so long before you run out of it. Public unions are raping the rest of the people and they know it. Time to put a stop to it.
Good luck to all who bought municipal bonds to avoid taxes. There will be an increasing number of municipal bankruptcies in the near future as the pension load smothers cities across the nation.
With Obamageddon/Taxageddon on its way, munis are becoming much more popular.
Obama can make good out of his stash.
Government employees. the real 1%.
Either void out the pensions or go do the bankruptcy thingie. Let the retired trough feeders fend for themselves. If they have to fight with the bridge trolls for a place to live, may the strongest troll win.
Unions in the Public Sector have bought Democrats to funnel money to them via perks, pay, and benefits, and in turn, the Taxpayer money is returned via Political Contributions back to the DNC. It's a money-laundering scheme, extrordinaire.