The American Legislative Exchange Council (ALEC) just released a startling report, detailing the critical underfunding facing state public pensions. State pensions – generous defined-benefit promises to state bureaucrats and public-sector union members – are the latest priority that spendthrift states have dropped the ball on.
ALEC has calculated that last year alone, unfunded pension liabilities (the pension has promised to pay out more than it has planned to) swelled a shocking $433 billion. This brings total state public pension liabilities to $6 trillion. “Unfunded liabilities of public pension plans continue to loom over state governments nationwide,” the report clearly stated. “Absent significant reforms, unfunded liabilities of state-administered pension plans will continue to grow and threaten the financial security of state retirees and taxpayers alike.”
The Pension Crisis in question affects present and future taxpayers the most, because it is a tax-hungry state that swipes the fruits of their labor in order to pay the obscenely high pension wages of state and local employees. The report further observes that the residents are all equally impacted as the funds that are fixed for pensions are now diverted from their sources, and are directed towards public safety, education sector and infrastructure that mostly includes transport.
The findings of the report also say that the state’s pension liabilities average to almost $18,676 for each American in the U.S. However, in some states, the figure is much higher. For instance, Alaska must extract nearly $45,689 from each taxpayer merely to meet pension obligations – the highest in all of America.
Together with Alaska are Illinois, Connecticut, New Mexico, and Ohio, as the highest liabilities per person in a state. Other states like Utah, Arizona, Alaska, Oklahoma, Pennsylvania, and Michigan, had made strong efforts in solving their pension liabilities by implementing strong reforms and by concentrating on the adjustments on the cost of living.
“Absent fundamental reform, broken pension systems threaten the financial sustainability of state budgets and the financial future of public servants,” said Jonathan Williams – the chief economist at ALEC. “Taxpayers, workers, and retirees will all share in the burden unless policymakers make significant changes.”
The report also says that the lawmakers and other officials involved are responsible, and should be accountable to ensure that all of the financial information that is provided and stored should be made transparent to both, the public and administration, online in a very accessible and basic format so that masses could interpret how their tax money is utilized.
“Transparency enables voters, taxpayers and all stakeholders to access, research and understand the operations of the government and hold lawmakers and officials accountable for their actions,” the report stated. “For more than a decade, ALEC has called on state and local governments to put their budgets online, in an accessible format for all taxpayers to see.”