Free Republic

FRANKFORT – The Kentucky House of Representatives and Senate passed a revised pension reform bill on Thursday night. Senate Bill 151, which served as the vehicle for a revised Senate Bill 1, passed by a 49 to 46 vote after over two hours of debate on the House floor. Eleven Republicans voted no while three Republicans didn’t vote. Later in the evening, the Senate passed the legislation on a 22-15 vote with 5 Republicans, Sen. Tom Buford, R-Nicholasville, Sen. C.B. Embrey, R-Morgantown, Sen. Alice Forgy Kerr, R-Lexington, Sen. Julie Raque Adams, R-Louisville, and Sen. Brandon Smith, R-Hazard, joining ten Democrats...

The only speaker standing between state budget officers and the opening cocktail hour at a Washington conference was the U.S. Secretary of Health and Human Services. What he said left no one in a celebratory mood. Medicaid costs, said then-Secretary Michael Leavitt, were projected to grow so fast that within 10 years they would “crowd out virtually every other category of spending.” State spending on higher education, infrastructure and safety, he predicted, would all get squeezed.

Maybe you think the worst is over for Chicago Public Schools: Springfield sprang for millions in budget and pension relief last year. Time to lean back and sip an icy beverage. Sorry to interrupt this reverie, but there are 1 billion reasons that you’re wrong. That is, the Chicago Teachers’ Pension Fund is short another $1 billion, according to the fund’s consultants.(snip) Why is this happening? Because of new estimates that reduce expected investment returns over the next decades by a half-percentage point, from 7.75 percent annually to 7.25 percent. Even a relatively small tweak creates a big hole. Hence,...

In Fiscal Year (FY) 2016, Colorado collected $25.4 billion in state and local taxes—or $4,590 for every man, woman, and child. While this is an impressive sum of money, it tells us little about whether or not the average Colorado taxpayer can afford this level of taxation. ... Colorado’s state and local tax burden (tax collections divided by private sector personal income) was the sixth lowest in the nation for FY 2016 at 11.8 percent—or -17 percent below the national average of 14.3 percent. ... Colorado’s tax burden has increased over time by only 3 percent to 11.8 percent in...

Truth in Accounting .. based on fiscal year 2016 comprehensive annual financial reports .. found that 64 cities do not have enough money to pay all of their bills, and in total, the cities have racked up $335.4 billion in unfunded municipal debt. ... Government reports are lengthy, cumbersome, and sometimes misleading documents ... taxpayers and citizens deserve easy-to-understand, truthful, and transparent financial information from their governments. ... to balance the budget, elected officials have not included the true costs of the government in their budget calculations and have pushed costs onto future taxpayers. ... TIA was unable to rank...

About a week ago I wrote that the potential for a state and municipal fiscal and public sector pension crisis is a defining issue for the next downturn here in the US. Global strategy and research company 13D joins me in worrying about it.Underfunded pensions mean crisis Here’s what they write: Fully-funded pensions are by their very design a mathematical impossibility —a topic we have discussed at length in these pages. In an effort to outrun their inevitable day of reckoning, these funds have assumed more risk, magnifying the likelihood of a massive unraveling. Most state pension funds now invest...

America's states and municipalities should be awash in good budget news. Unemployment remains below 5%, inflation is tame, and the stock market rose more than 20% in 2017 — the ninth year of a bull market. Yet many local governments faced intense struggles last year to balance their books. Localities have confronted unrelenting fiscal pressure since 2008, a result of the weakest recovery since World War II of tax revenues combined with ever-escalating costs. Many states and localities have had to rewrite budget books in ways that leave taxpayers paying more — and receiving less. "U.S. states have entered a...

Illinois state lawmakers on Jan. 30 heard a proposal to borrow more than $107 billion to fund pensions. If implemented, it would be the biggest debt sale in municipal bond market history. Lawmakers discussed the proposal in the House Personnel & Pensions Committee. The State Universities Annuitants Association, or SUAA, claims the plan will save the state $103 billion in the next 25 years. But baked into that estimate are assumptions regarding borrowing and investment returns that are by no means guaranteed. Illinois’ pension debt is as high as $250 billion, according to Moody’s Investment Service. The SUAA plan is...

Perceptive conservatives will have noticed by now that the self-righteousness of the left increasingly knows no bounds. To put it another way, there are very few people, companies, institutions, bureaucracies, or governments left that liberals have not excoriated, picketed, boycotted, or sued, all in an effort to extirpate from this planet whomever and whatever has the audacity to contradict them. Amusingly, this tendency towards perfectionism/sanctimony often pits leftists against one another. In the end, though, the damage that this epidemic of intolerance does to the fabric of American society is serious and lasting. Recently, New York Governor Andrew Cuomo unveiled...

Ten years ago, subprime mortgages went from a little-known form of lending to a precipitating cause of the international banking crisis that led to the Great Recession of 2008 to 2009. Like these mortgages, another relatively obscure financial problem could end up being the next big taxpayer bailout. Unless the funding crisis for multiemployer pension plans is addressed, the “solution” will look more like the savings and loan crisis of the 1980s, under which the taxpayers lost $123.8 billion. In his testimony last November in the House, Pension Benefit Guaranty Corporation (PBGC) Director Thomas Reeder wrote, “Legislation is needed to...

Land of leaving: Moving companies rank Illinois No. 1 for outbound vans Studies by two major American moving companies rank Illinois as the top “outbound” state of 2017. On Jan. 2, United Van Lines released its 41st annual National Movers Study and Atlas Van Lines released its 2017 Migration Patterns study. United based the study on its customers’ household moves made in 2017, and Atlas studied nearly 73,000 interstate and cross-border relocations of household goods from Jan. 1, 2017 through Dec. 15, 2017. In both studies, Illinois was home to the highest rate of outbound moves in the nation. United’s...

Connecticut has the most underfunded pension system in the nation, amassing more than $127.7 billion in liabilities.. The study entitled Unaccountable and Unaffordable showed Connecticut’s pension system dropping below Illinois and Kentucky when its pension liabilities were calculated with a “risk-free” discount rate equal to the rate of a U.S. Treasury bond. Connecticut’s unfunded pension liability rose from $99.2 billion in ALEC’s 2016 study to $127.7 billion in 2017, leaving the pension system only 19 percent funded. The debt from the public pensions amounts to $35,721 per person in Connecticut, the second highest per capita debt in the nation behind...

Despite facing a shortfall of about $70 billion, Pennsylvania's public-pension systems lavishly enrich a few former state employees while most get far more modest payouts. Consider some pension-data findings from The Philadelphia Inquirer and Philadelphia Daily News. The average 2016 payout to Pennsylvania's 127,000-plus former employees or their beneficiaries was $27,722. But “a separate class of Keystone State pensioners” get “checks that alone put them among the top tier of all income earners” nationwide: Twenty collect more than $215,000 annually, while 500-plus collect $100,000 or more. Even after pleading guilty to child endangerment in the Jerry Sandusky pedophilia scandal, former...

**SNIP** Still, thanks to previous decisions made by the Emanuel-controlled City Hall and Chicago Public Schools, the typical homeowner will have to pay $174 more in taxes next year. About $97 of that increase can be chalked up to property tax hikes, but Emanuel also is boosting 911 fees by $40 a year for a family with three phone lines, and water bills will go up $37 for the typical home. All told, the average family will be paying $1,813 more a year in taxes and fees to the city and schools than they did before Emanuel took office in...

During the next five weeks, the CalPERS board, custodian of $326 billion in assets needed to fulfill retirement promises for 1.8 million California public employees and beneficiaries, will make decisions affecting government budgets for decades to come. The problem is, despite their fiduciary duty under the state Constitution to “protect the competency of the assets” under their absolute control, CalPERS is roughly $153 billion short of fully funding the retirement promises earned to date. How did CalPERS dig this huge hole? During the last decade, they manipulated actuarial assumptions and methods to keep employer and employee contribution rates low in...

California governments likely will make do with fewer teachers, parks employees and other public workers while they struggle to absorb fast-rising pension costs in the next few years, a former state lawmaker argues in a study released this week through Stanford University. Former Democratic Assemblyman Joe Nation projects that many cities, counties and school districts will double their spending on pensions by 2030, “crowding out” their ability to fund public services.

California pension worries most often focus on CalPERS and CalSTRS, the state’s two multi-employer behemoths. But the state has many other underfunded plans, and these city and county systems pose significant challenges for governments that contribute to them. The City of Los Angeles faces the largest municipal pension funding gap, measured in absolute dollar terms. According to the city’s 2016 Comprehensive Annual Financial Report, Los Angeles’ Net Pension Liability totaled $8.2 billion. Curiously, this number does not appear on the city’s government-wide balance sheet (called a Statement of Net Position). Instead, the $8.2 billion is reported as part of LA’s...

Ten workers and retirees from government agencies in two far corners of California likely will see their pensions slashed because their employers have not paid bills to the state’s largest retirement fund in more than a year. Trinity County Waterworks District No. 1 west of Redding and Niland Sanitary District from Imperial County are in line to become the third and fourth government agencies to break with CalPERS over the past 12 months in a manner that shortchanges their retirees. The CalPERS Board of Administration is scheduled next week to vote on ending contracts with the two small districts because...

A resident of my city of Pacific Grove recently did a huge service on Facebook by linking to a site that gives pay and pensions for state and local government workers. It's breathtaking. Question: Who received the highest pension in 2017 and how much was it? Answer: Ronald D. Miller. $366,529.20. Mr. Miller was on the teaching faculty at the University of California, San Francisco. The 7th highest pension, by the way, was received by someone I know and like: Richard W. Roll, the well-known finance professor at UCLA. So this is not a gotcha. It's simply pointing out...

Connecticut, home to hedge fund billionaires alongside cities mired in poverty, is racing against the clock to pass a budget or face further spending cuts to education and municipal aid across the state. Nearly two months without a budget, Connecticut is getting crushed by a burdensome debt load that has squeezed spending and amplified legislative discord. State lawmakers must agree on a biennial budget soon or else Governor Dannel Malloy’s executive order to slash state aid to municipalities and eliminate school funding for some districts will go into effect in October. The state faces a $3.5 billion deficit over the...