I am not a state pensioner - but I pay state taxes, and like most of you I am watching the economic disaster of the COVID situation cause utter destruction. Most states have grossly mismanaged their bloated pension systems, and COVID has caused their ships to hit the proverbial iceberg.
Despite the massive turn around in investment opportunities since the 2008 economic collapse, state pensions have only become more insolvent. They couldn't exploit that incredible growth - and I predict that many states pensions systems are about to collapse.
See this article from Reason:
I know many of the responses here will be "Good - F em!" Believe me, I am no fan of funding the six figure, gold plated state pensions in my state. I post this because the pension collapse is going to affect quite a bit: the economy, and politics, very soon.
I spoke to a friend who runs and accounting firm, and who knows many politicians at both the state and national level. He told me that some states are going to keep hoping for a bailout, and other states are trying to use the COVID crisis as an excuse to cover up for their years of pension mismanagement and over promises. He also said the instinct in many states will be raise taxes (sales, property), but even many insane Democrats know that with the economic collapse, this will only make their states bleed out taxpayers and revenue. You can't get blood from a stone.
We live in incredible times.
Can’t get blood from a stone, but can sure grind it to dust.
Exit tax by each state would stifle migration.
If someone promises you something 40 years in the future and it doesn’t happen, they did not necessarily lie to you. No one has a crystal ball to see that far ahead.
Some here won’t have the attention span to read your whole post. It’s incredible that I did :-) and is very accurate.
but it hurts the narrative that big bed New York will be destroyed. New York State pension fund is actually very well-funded right now.
And as the article States Kentucky has about 19% of what has been promised to Future retirees.
in the end folks will be shocked or which states need the help the most.
And I wonder if they will sing the same tune then
In NYS, a cousin was a police officer earning $40,000 a year. At age 50, he worked so much overtime his final year, he retired with a state pension of $89,000. State pensions are graft for the unions.
Sounds as a good a time as any to work to get the vastly out control public pension systems overhauled and back in control and away from pandering liberal politicians. I say no to any federal bailouts to states with out of control public pension systems. Enough is enough already.
About 34 days ago, before any “official” lockdown, There was already a lot of small businesses closing. This was before I believed we had crossed the line and killed the economy. But I said to my friends, “States live off tax income - and much of that is sales and income tax. If people stop earning and spending, the states are going to see their income collapse. And unlike the fedgov, they can’t print money.
In KY, Bevin lost because he was trying to save the state’s economy by making some tough choices regarding state pensions (ours were, I believe, second worst only behind Illinois). The teachers hated him so much (even the conservative ones) that they successfully got our states previous, corrupt governor’s son elected, beating Bevin by 5,000 votes out of 1.5 million. And here we are.
Looks like he’ll be a one termer too. It was comical how some of our female friends - even republican ones - were posting pictures of themselves and their husband on facebook, with Beshear’s face over their husband’s. It was creepy.
He was popular even though the only thing he actually did was approve four new abortion clinics in a state where the sole clinic was on its last legs. This is a strong pro-life state. Once the polish fades, this guy is going to be in deep water in popularity, I suspect.
> “Most states have grossly mismanaged their bloated pension systems ...”
And now they want a magic COVID bailout.
The public sector unions have brought this on themselves and they won’t accept responsibility because they are irresponsible to begin with and can be nothing but irresponsible.
I remember an acquaintance’s divorced spouse getting a job as a special education teacher and after 5 years of that applied to be a principal at a public school making close to six figures. Then retired after another 5 years at 90% of salary. WTH? And this was all ‘normal’ business.
I’m not insensitive but all the public sector retirees can downsize and make do on Social Security.
> Kentucky already had the worst-funded state pension system in the nation
Former governor Matt Bevin was excoriated for trying to fix that and lost re-election in part because of it.
These State “pensions” rely on a Constitutional absurdity since they eliminate self-rule by the people through the mechanism of an elected legislature which holds delegated powers over taxation and credit.
One unquestioned maxim of a constitutional republic is that one legislature’s actions do not survive its term - that is, no legislature can prevent or forbid any action by its successor. If this were not so, the ability of the people to remove an obnoxious government and replace it with another at an election would be void.
All state labor “contracts” presume that the people CANNOT elect a Legislature which will alter or eliminate payments promised by a prior legislature, that a freely elected set of representatives lacks the power to do so.
But this is absurd, since the conclusion would be that such a successor legislature would be bound to raise taxes against its will and against the will of the people who sent them in order to fulfill a reckless promise by the legislature they are replacing.
Such a labor “contract” would amend the State’s Constitution giving sole legislative power to a Legislature, UNLESS the same State Constitution had already been amended to forbid the Legislature from acting to impair contracts arrived at in the past that promised a certain amount of payments to be raised through taxation.
Break out the yellow vests?
No wait, it’s purple shirts here
States cannot declare bankruptcy and many pensions are state Constitution guaranteed.
I would love for Trump to say “Any state which wants a bailout must FIRST submit to an audit, using forensic accountants of MY choosing, to get to the bottom of why they are in such bad shape”.
This is the drawback. The tsunami is coming.
To give just one example...a few years ago it was revealed that a bus driver for the MBTA (Greater Boston's public transit system) retired...in his 50s...with a pension of $97,000 a year.
A BUS DRIVER!
I worked in academic medicine for decades and I know physicians and surgeons who don't have a pension that big!
Y’all know how the federal government requires private enterprises to have fully or near-fully funded pension systems if they have pensions at all? Well, those requirements do not extent to governments, up to and including federal entities.
So, states are free to make all the pension promises they want. Can’t squeeze blood out of a bankrupt turnip.
As long as states have defined benefit plans for their public sector, they will always run the risk of going broke. The solution is to bite the bullet and go to defined contribution plans and let the public sector workers carry the risk of the stock market gyrations, not the taxpayers, just as private sector workers do.
State and federal pensions are a travesty. Work for 20-25 years, retire in your forties at full or nearly full pay, then move out of the state and pay no money in taxes back for your largess, leaving the tax burden of paying for it on the backs of those left behind.
North Carolina is a haven for these idiots, as are other states.
Setting aside Kentucky and the other worst of the worst States, there is a huge issue for local governments. Note that I live in New York and I can only speak for the local government issues in New York.
New York has a “State & Local System” whereby local governments pay into the State system to provide a pension for local government employees.
When we use a phrase like “underfunded public pensions” realize there is some type underlying actuarial calculation.
This is crazy, but in New York they allow local government to fund pensions to an actuarial calculation. What does that mean? In a given year if the local government only has to fund the pension for their members to some actuarial standard.
So, as a representation of the market, if the S&P 500 goes up 11% in a given year, the local government doesn’t have to contribute as much.
Likewise, if the S&P 500 goes down 15% the local government has to then contribute MUCH more to the system.
The State Comptroller’s Office allows this insanity of funding pensions less when times are good and demanding much more pension funding when times are bad.
All the while the, whether you agree with pensions or not, the employees (future pensioners) are paying a level contribution rate. The local government is contributing “...when need be” -basically.
All this epic malfeasance is culminating RIGHT NOW!
During a financial crisis local governments will now have to make double digit pension contributions...12-15 maybe 20 percent on salaries across the board.
The net effect, without giving anyone a raise, local government payroll costs will increase double digit percentages.
“The COVID-19 Economic Collapse Is Absolutely Wrecking State Pension Systems...”
Utter crap! The associated state government wrecked it long ago by allowing it in the first place. Government employee unions should be OUTLAWED!! And certainly not bailed out, despite it affecting potentially many Freepers here. Outlaw the public unions today, current pensioners are allowed to continue to receive pensions but at a lower amount, and all new govey employees from this day forward are treated as private business employees for all purposes.