There has been mucho chatter recently about gov’t pay levels which exceed comparable private industry rates and gov’t pension plans that make the UAW envious.
Bottom line: Many states have crafted gov’t pension plans that are going to implode in the not too distant future.
So, tax payers in fiscally responsible states will be forced to ante more into the pot to bail out the free-promising, overspending states.
Think about it next time you’re standing in line at the DMV.
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Bloomberg: Pension Plans Go Broke as Public Payrolls Expand, June 11, 2010
Seven states will run out of money to pay public pensions by 2020.
That hasn’t stopped them from hiring new employees.
The seven are Illinois, Connecticut, Indiana, New Jersey, Hawaii, Louisiana and Oklahoma.
Combined, these states added 9,700 workers to both state and local government payrolls between December 2007 and April of this year.
Companies started firing more employees than they hired in January 2008.
Employment peaked in December 2007 at 115.6 million. During the subsequent two years, companies shed 8.5 million workers, or 7.3 percent.
By contrast, from a peak of 19.8 million, state and local governments have reduced headcount by 231,000, or 1.2 percent.
What our politicians are telling us is that state and local governments are optimally sized — just right.
If tax revenue declines, well, then we’ll just have to find more taxes and fees to replace it.
We couldn’t possibly look at the cost-of-labor side of the equation.
If you really want to provoke outrage, you have to take into consideration public pensions.
Generous and bloated are the terms that have been used to describe them … What’s clear is that such pensions and benefits now seem unaffordable, because those responsible — state and, sometimes, local governments — didn’t put away enough, or haven’t invested wisely enough, to pay for them.
Full article:
http://www.bloomberg.com/apps/news?pid=20601039&sid=awW.rqJzAad4
The Homa Files 
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