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Interesting and scary piece on municipal pension crisis
Topic Started: Aug 8 2010, 03:12 PM (343 Views)
jon-nyc
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Ht Quirt.

http://kelloggfinance.wordpress.com/2010/03/22/the-day-of-reckoning-for-state-pension-plans/
In my defense, I was left unsupervised.
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George K
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Finally
Related story: How public worker pensions are too rich for New York's - and America's - blood.

And $1.5mm in benefits from a town whose average income is $29K: http://www.latimes.com/news/local/la-me-bell-benefits-20100808,0,1450972.story
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Steve Miller
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George K
Aug 8 2010, 04:24 PM
And $1.5mm in benefits from a town whose average income is $29K
Lots of local folk plenty steamed about that one, and you can bet that Bell isn't the only city where it is happening.

Ex-governor Moonbeam (who is currently AG and is running to become retread governor Moonbeam) is supposed to be all over it and I'm hoping they can find a reason to take that guys pension away. He's opened investigations in several other cities as well.

Political grandstanding to be sure, but if that's what to takes to stop this sort of abuse from taking place then I am all for it.
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George K
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I understand it's wrong, and all that, but....

...was it illegal?

If not, I don't see much of a problem.
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Kincaid
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HOLY CARP!!!
Quote:
 
The damage inflicted by this problem depends upon how large the benefits owed to workers actually are relative to the state’s revenues. In Illinois, obligations already promised to workers as of today will result in over $14.5 billion in pension payments in 2019, the year after the funds will run dry. Tax revenues for the state of Illinois were $31.9 billion in 2008, according to a recent U.S. Census Bureau table. Moving to a pay-as-you-go system would therefore be a catastrophic shock to the revenue needs of the state of Illinois, amounting to 46% of 2008 tax revenue. For Louisiana, the corresponding figure is a smaller but still worrisome 28%.

Some states whose funds might not run out of money until the mid 2020s face a very challenging situation when they eventually do. Ohio collected $26.4 billion in tax revenues 2008. If their pension funds run dry in 2023, they will face $19.1 billion of benefit payments owed in 2024 out of general revenues. That’s over 72% of 2008 tax revenues.


Look at those numbers. Those are insane. I knew it was bad but didn't realize it was that bad. I mean, I always knew that at some point a state was just going to go bankrupt and was going to default on all their commitments to retirees. I guess I didn't realize how pervasive it was going to be. And here we are worrying about Social Security and Medicare. This is going to be a sea change in our country.
Kincaid - disgusted Republican Partisan since 2006.
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jon-nyc
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George K
Aug 8 2010, 04:54 PM
I understand it's wrong, and all that, but....

...was it illegal?

If not, I don't see much of a problem.
Good to know you'll happily write your check when the time comes.
In my defense, I was left unsupervised.
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Steve Miller
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George K
Aug 8 2010, 04:54 PM
I understand it's wrong, and all that, but....

...was it illegal?

That's the $64mil question. Nobody knows.

There is a question about one line item in the Bell city budget called "other. It shows up every year and amounts to some 50% of the total budget each year.

Not necessarily illegal, but fishy. Very fishy.
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George K
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jon-nyc
Aug 8 2010, 05:23 PM
Good to know you'll happily write your check when the time comes.
I'm already doing it in Illinois (please, don't pronounce the 's'). I'll let the Kalifornians worry about their own.
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Jeff
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Steve Miller
Aug 8 2010, 04:52 PM


Ex-governor Moonbeam (who is currently AG and is running to become retread governor Moonbeam) is supposed to be all over it and I'm hoping they can find a reason to take that guys pension away. He's opened investigations in several other cities as well.

Political grandstanding to be sure, but if that's what to takes to stop this sort of abuse from taking place then I am all for it.
Not grandstanding. A calculated cynical farce. Moonbeam is the guy who passed the law allowing Cali municipal workers to unionize in the 1970's starting the Democrat-union electoral corruption circle over pensions we are now dealing with. He is directly and personally the cause of the current pension problem in California, and many of the state's current fiscal woes.

Indiana Republican Governor Daniels, OTOH, canceled the right of Indiana municipal workers to unionize, greatly helping his state's economy survive and even prosper during this downturn.
Edited by Jeff, Aug 8 2010, 06:16 PM.
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brenda
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..............
Wow. I thought Minnesooota was in tough shape with its public employees retirement funds, but many are worse than we are. We've taken steps here toward helping PERA, but municipalities face their own tsunamis. They like to ask the state to bail them out from their obligations, but the state hasn't got funds to cover its own budget.
“Weeds are flowers, too, once you get to know them.”
~A.A. Milne
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Kincaid
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HOLY CARP!!!
I can't imagine how the SHTF when states start lining up and threatening the Feds with bankruptcy and default if they don't get Federal help.
Kincaid - disgusted Republican Partisan since 2006.
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Axtremus
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HOLY CARP!!!
Kincaid
Aug 8 2010, 07:56 PM
I can't imagine how the SHTF when states start lining up and threatening the Feds with bankruptcy and default if they don't get Federal help.
Let them go bankrupt ... that's one way to solve their liability problem. (Oh, unload your muni bonds toot-sweet.)
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Horace
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Yep scary is the right word. Just another example of the 10 or 15 ways in which the old and idle (not there's anything wrong with that) will collapse the economy under their weight in the long term.
As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good?
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George K
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Axtremus
Aug 8 2010, 08:04 PM
Kincaid
Aug 8 2010, 07:56 PM
I can't imagine how the SHTF when states start lining up and threatening the Feds with bankruptcy and default if they don't get Federal help.
Let them go bankrupt ... that's one way to solve their liability problem. (Oh, unload your muni bonds toot-sweet.)
Just like the GM and Chrysler..

...wait.

Never mind.
A guide to GKSR: Click

"Now look here, you Baltic gas passer... "
- Mik, 6/14/08


Nothing is as effective as homeopathy.

I'd rather listen to an hour of Abba than an hour of The Beatles.
- Klaus, 4/29/18
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jon-nyc
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Cheers
George K
Aug 9 2010, 02:46 AM
Axtremus
Aug 8 2010, 08:04 PM
Kincaid
Aug 8 2010, 07:56 PM
I can't imagine how the SHTF when states start lining up and threatening the Feds with bankruptcy and default if they don't get Federal help.
Let them go bankrupt ... that's one way to solve their liability problem. (Oh, unload your muni bonds toot-sweet.)
Just like the GM and Chrysler..

...wait.

Never mind.
More like Freddie, Fannie, and AIG.

Oh wait...


Never mind.
In my defense, I was left unsupervised.
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Axtremus
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HOLY CARP!!!
GM filed for bankruptcy on June 1, 2009. (link)
Chrysler filed for bankruptcy on April 30, 2009. (link)
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