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Tick Tock Goes the Pension Bomb
by BOB WILLIAMS | October 26, 2010
Public sector compensation and retirement benefits have made headlines lately for their sheer size and weight in comparison to the private sector. The problem of unfunded liabilities is decades in the making, but the bills are starting to come due this legislative session. Budget leaders are learning that they won't have decades to undo this disaster.
Dire outcomes have been predicted for municipal pension systems. The Kellogg School of Management says that cities and counties could add $574 billion to the $3 trillion in unfunded liabilities for the states.
The Manhattan Institute released a study showing that New York taxpayers have a $205 billion unfunded liability for retired state and local government employees.
Oklahoma has an explosion coming: experts predict it is only a matter of time before the pension bomb blows.
Of course, pensions are not the only problem facing state legislators as they begin crafting budgets for next year. There are a host of other areas of government-welfare payments, capital outlay, and others-that have become bloated in recent years. Here are a few states that faced problems in the last week.
In Louisiana, Governor Bobby Jindal ordered $107 million in cuts to eliminate the state budget shortfall. In an effort to trim its portion of the budget, the state corrections agency may sell off prisons.
Michigan faces a $1 to $1.5 billion state budget shortfall for FY 2011-12.
North Carolina faces up to a $4 billion state budget shortfall in their next budget.
Filed Under : Pensions