Free Republic

McAllen, TX -- Gone are the days when a kid could make a few extra bucks by selling lemonade on the corner of their street. These days, it's against the law. A 12-year-old girl and her little brother were just trying to earn a few dollars for their two hermit crabs when a city code enforcement officer in Texas came and shut them down. The officer told their grandmother that the children needed a permit to sell lemonade, and their grandmother was ticketed for the offense. "I was mad," the 12-year-old said. "I don't understand why someone would want to...

Many say that the situation in Greece is a harbinger of what is coming to the United States. They are right. But first it will come to states like New York, California and Michigan, which are stretched way beyond their means and deeply in debt. Until now, the problems in these states have been papered over by federal aid. Essentially, Washington has relieved these states (and the local governments they fund) of their constitutional obligations to balance their budgets by giving them welfare checks in the nick of time. Barack Obama now seeks to pass $50 billion in additional welfare...

State governments from New Jersey to California that are struggling to close budget deficits are skipping or deferring payments to already underfunded public-employee pension plans. The moves could help ease today's budget pressures, but will make tomorrow's worse. New Jersey's governor, a fiscal conservative, has proposed not making the state's entire $3 billion contribution to its pension funds because of the state's $11 billion budget deficit. Virginia has proposed paying only $1.5 billion of the $2.2 billion required pension contribution. Connecticut Republican Gov. M. Jodi Rell is deferring $100 million in payments this year to the pension fund for state...

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay. And states are responding in sometimes desperate ways, raising concerns that they, too, could face a debt crisis. New Hampshire was recently ordered by its State Supreme Court to put back $110 million that it took from a medical malpractice insurance...

States and companies have started investing very differently when it comes to the billions of dollars they are safeguarding for workers’ retirement. Companies are quietly and gradually moving their pension funds out of stocks. They want to reduce their investment risk and are buying more long-term bonds. But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk. “In effect, they’re going to Las Vegas,” said...

... The National Governors' Association recently reported that the states had faced budget gaps of $108.7 billion in fiscal 2010 -- 16% of their total general-fund spending of $664 billion in 2009. They closed $89.8 billion of their gaps, using tax and fee increases of $23.9 billion, and budget cuts of $55.7 billion. For 2011 and 2012, the states already expect budget gaps of $55.4 billion and $61.8 billion. Such sums are chump change compared with the federal government's current $1.6 trillion budget deficit, but states have been the biggest beneficiaries of that deficit spending, to the tune of more...

State governments face a trillion-dollar gap between the pension, health-care and other retirement benefits promised to public employees and the money set aside to pay for them, according to a new report from the Pew Center on the States. States promised current and retired workers a total of $3.35 trillion in benefits through June 30, 2008, said the report from the nonprofit research group, a division of Pew Charitable Trusts. But state governments had contributed only $2.35 trillion to their benefit plans to pay current and future bills, the report said. The Pew report said its estimate of the funding...

Calpers is considering whether to reduce the projected rate of return used by the giant pension fund to make investment decisions. A cut could force cash-strapped governments in California to pay millions more each year to cover their employee pension obligations. Since 2003, the California Public Employees' Retirement System has assumed that the value of its stocks, bonds and other holdings would increase by 7.75% a year. But the likelihood of an extended period of modest economic growth world-wide is fueling doubts inside Calpers that the pension fund can continue aiming so high. No specific alternate targets have been discussed...