6 ms·

Do you have some numbers to share to support the hypothesis that pension plans will bankrupt these states without new taxes?

toomuchtodo 7y ago
Illinois: https://www.reuters.com/article/us-illinois-pensions/illinois-unfunded-pension-liability-climbs-to-1335-billion-idUSKBN1O62KC https://www.reuters.com/article/us-illinois-pensions/illinoi... (Illinois' unfunded pension liability climbs to $133.5 billion) https://www.policyed.org/pension-pursuit/pension-liability-state/map https://www.policyed.org/pension-pursuit/pension-liability-s... (PolicyEd: Interactive Map of Pension Liability by State and City) Illinois is an outlier, and is seriously in trouble, but most other states will be fine.
- afterburner 7y ago
  Spread out over how many years?
  - deleted 7y ago
    [deleted]
- nemo44x 7y ago
  To the point that the other states are rather wealthy, yes they'll be fine. My real question is what do these states do? Continue to raise taxes? Even the other states in question are losing high net worth tax payers to places like Nashville, Texas, Florida, Arizona, etc. Do the just restructure in bankruptcy and leave all these people hanging who are relying on their pensions to live on? Neither of these possible. I'm really at a loss at what these states should do.
  - toomuchtodo 7y ago
    States can't declare bankruptcy, and in the case of Illinois, public pension benefits are guaranteed by the state's constitution. I don't have an answer unfortunately, although I think often of possible solutions.
- rsclient 7y ago
  Total pension liability (from your numbers): 133.5 billion There are 12.80 million people in Illinois, so the per-person liability is $10429 A typical pension is paid out over the course of about 20 years. The liability per person per year is $521 Put differently: the pension liability per year is 6.675 billion. Illinois rakes in about $45 billion per year in taxes. That's at most "awkward" to handle and at best "easy" and possibly even trivial.
  - scarejunba 7y ago
    Surely not. Being 15% underwater on bills is not easy to recover from. That $45 billion is already used up. You can't just get 7 billion of it every year back. That's humongous! And because the underfundedness compounds (if you have less capital, then you fall farther behind because your growth is on your capital being as projected), they're in real trouble.
  - jdkee 7y ago
    It is almost double the amount cited above, estimated to be $241,000,000,000. https://www.illinoispolicy.org/illinois-241b-pension-debt-still-worst-in-nation-despite-record-income-tax-hike/ https://www.illinoispolicy.org/illinois-241b-pension-debt-st...
    - colinmhayes 7y ago
      IPI is the Cato institute of Illinois. Consistent track record of putting conservative talking points above facts.
      - lotsofpulp 7y ago
        While that may be true, the governments have a consistent track record of using assumption that understate pension costs and a track record of underfunding the pensions. History has shown that one would be more accurate if they erred on the side that calculated higher costs, especially since they can kick the can down the road for so long.
      - jdkee 7y ago
vidanay 7y ago
It's almost impossible for Illinois to raise new taxes. People are already fleeing the state at an impressive rate, and any tax increase will only amplify the death spiral. We will be leaving in approx six months after having lived here for all my 48 years.
- cnst 7y ago
  "Illinnoyed by higher taxes? Come to Indiana." That's what a billboard said on some highway around Illinois / Indiana. :-)
nemo44x 7y ago
https://www.pressofatlanticcity.com/opinion/editorials/stress-test-finds-nj-pension-funds-could-be-gone-in/article_120b604d-5d31-585d-97ce-4b4ca508d2e5.html https://www.pressofatlanticcity.com/opinion/editorials/stres... https://www.nj.com/politics/2019/09/nj-is-facing-a-12b-public-worker-pension-time-bomb.html https://www.nj.com/politics/2019/09/nj-is-facing-a-12b-publi... Even by 2022 the NJ pension is in trouble. It's not hard to read about these as many journalists are covering the pension time bombs in numerous states. State's which happen to be some of the most taxed states in the country.
lotsofpulp 7y ago
https://burypensions.wordpress.com https://burypensions.wordpress.com The states won't be bankrupted. Just a greater and greater portion of tax revenue will go towards paying for debt, which means less for investments for the future, so current and future taxpayers will take a hit to quality of life compared to better managed states (all else being equal).

toomuchtodo 7y ago

Illinois: https://www.reuters.com/article/us-illinois-pensions/illinois-unfunded-pension-liability-climbs-to-1335-billion-idUSKBN1O62KC https://www.reuters.com/article/us-illinois-pensions/illinoi... (Illinois' unfunded pension liability climbs to $133.5 billion) https://www.policyed.org/pension-pursuit/pension-liability-state/map https://www.policyed.org/pension-pursuit/pension-liability-s... (PolicyEd: Interactive Map of Pension Liability by State and City) Illinois is an outlier, and is seriously in trouble, but most other states will be fine.

afterburner 7y ago
Spread out over how many years?
- deleted 7y ago
  [deleted]
nemo44x 7y ago
To the point that the other states are rather wealthy, yes they'll be fine. My real question is what do these states do? Continue to raise taxes? Even the other states in question are losing high net worth tax payers to places like Nashville, Texas, Florida, Arizona, etc. Do the just restructure in bankruptcy and leave all these people hanging who are relying on their pensions to live on? Neither of these possible. I'm really at a loss at what these states should do.
- toomuchtodo 7y ago
  States can't declare bankruptcy, and in the case of Illinois, public pension benefits are guaranteed by the state's constitution. I don't have an answer unfortunately, although I think often of possible solutions.
rsclient 7y ago
Total pension liability (from your numbers): 133.5 billion There are 12.80 million people in Illinois, so the per-person liability is $10429 A typical pension is paid out over the course of about 20 years. The liability per person per year is $521 Put differently: the pension liability per year is 6.675 billion. Illinois rakes in about $45 billion per year in taxes. That's at most "awkward" to handle and at best "easy" and possibly even trivial.
- scarejunba 7y ago
  Surely not. Being 15% underwater on bills is not easy to recover from. That $45 billion is already used up. You can't just get 7 billion of it every year back. That's humongous! And because the underfundedness compounds (if you have less capital, then you fall farther behind because your growth is on your capital being as projected), they're in real trouble.
- jdkee 7y ago
  It is almost double the amount cited above, estimated to be $241,000,000,000. https://www.illinoispolicy.org/illinois-241b-pension-debt-still-worst-in-nation-despite-record-income-tax-hike/ https://www.illinoispolicy.org/illinois-241b-pension-debt-st...
  - colinmhayes 7y ago
    IPI is the Cato institute of Illinois. Consistent track record of putting conservative talking points above facts.
    - lotsofpulp 7y ago
      While that may be true, the governments have a consistent track record of using assumption that understate pension costs and a track record of underfunding the pensions. History has shown that one would be more accurate if they erred on the side that calculated higher costs, especially since they can kick the can down the road for so long.
    - jdkee 7y ago

vidanay 7y ago

It's almost impossible for Illinois to raise new taxes. People are already fleeing the state at an impressive rate, and any tax increase will only amplify the death spiral. We will be leaving in approx six months after having lived here for all my 48 years.

cnst 7y ago
"Illinnoyed by higher taxes? Come to Indiana." That's what a billboard said on some highway around Illinois / Indiana. :-)

nemo44x 7y ago

https://www.pressofatlanticcity.com/opinion/editorials/stress-test-finds-nj-pension-funds-could-be-gone-in/article_120b604d-5d31-585d-97ce-4b4ca508d2e5.html https://www.pressofatlanticcity.com/opinion/editorials/stres... https://www.nj.com/politics/2019/09/nj-is-facing-a-12b-public-worker-pension-time-bomb.html https://www.nj.com/politics/2019/09/nj-is-facing-a-12b-publi... Even by 2022 the NJ pension is in trouble. It's not hard to read about these as many journalists are covering the pension time bombs in numerous states. State's which happen to be some of the most taxed states in the country.

lotsofpulp 7y ago

https://burypensions.wordpress.com https://burypensions.wordpress.com The states won't be bankrupted. Just a greater and greater portion of tax revenue will go towards paying for debt, which means less for investments for the future, so current and future taxpayers will take a hit to quality of life compared to better managed states (all else being equal).