Wanna sobering appraisal of the broken state budget? Go to CT Mirror reporter Keith Phaneuf who’s marinated in state finances a long time. It’s instructive because unfunded pension liability also impacts municipal finances. This issue emerges center stage as a major talking point for gubernatorial candidates in the 2018 election already underway. Decades in the making covering both Republican and Democratic administrations, read about the state’s legacy of debt leading to a fiscal cliff where “retirement costs outstrip revenue growth.”
How big is the problem?
The answer can be found in just four line items in the state budget:
— Pensions for public school teachers;
— Pensions for state employees;
— Health care for retired state employees;
— And debt service on bonding for capital projects;Twenty years ago, those four line items composed 12 percent of the General Fund. Next fiscal year they will consume 31 percent.
And the speed with which they gobble up the budget is accelerating.
Full story here.
The ups and downs of pensions and the actuaries use of assumptions in formulas causes headaches to many who try to understand.
Simply put over the past 10 years what has been the return on your savings accounts. Happy with 1%? And what happened to your equity portfolio in crashes in the past 20 years? You maybe lost money and when looking back your average return was likely overall, combined less than 5%?
So why expect investment advisers to perform much better than what the market is doing? Why assume your pension asset portfolio will grow faster than marketplace opportunities? Life doesn’t work that way on average.
Why do legislators keep the assumptions high? Because to do otherwise they would have to immediately consider that their liabilities are much larger than they have told the public, and they don’t want to do that if they are running again. So ignorance is encouraged and transparency is absent. And change is slow to come.
I have sent OIB a couple papers that I have written in the past three weeks on our Bridgeport problem. One is technical and probably too long, but it does provide citations to our own external audit 2016 with the most current pension info provided to taxpayers. The second one, tells the story in a different way from the viewpoint of Elmer Fudd.
Tonight I shall address the CC with a third story demonstrating that the size of genuine “pension liabilities” is critical to know and consider. Especially when a leader has everyone convinced that a new bond floated in 2017 will allow us not to worry about past service liabilities again. Yes, Mayor Ganim has promised that a new bonding will lower our pension contribution expenses by millions AND SATISFY THE FUNDING REQUIRED BY MERS TO SATISFY BRIDGEPORT”S PAST SERVICE LIABILITY……caused by Police and Fire overtime earnings eligibility for increasing retirement incomes. Sweet deal for whom? Take a look. What do you see? What will the Council see? Time will tell.
The private sectors are all getting out of offering pentions. Its 401k’s now. Sorry ,but the day of pentions, health benefits after retirement has to end.
Pension and health benefits don’t have to end, it’s a matter of priorities for America, having a standing aarmy of over a million and half miltary fighters plus nuclear weapons to fight two wars at the same time is unrealistic in this age. Farmers on big farms getting tax write off for not farming and the for big banks and businesses that are to large to fail, tax cuts to the rich, there’s more than enough money for free health care for ALL Americans.
Ron, you are correct to point out priorities not considered by our leaders enough. If priorities cost money from taxpayers, I hope you agree that the price tags are made public? Time will tell.
I believe there are only 64 of us in Pension Plan B, (Fire only)which was raided for over $20 million of our 70 million, to help pay the MERS vig. We were well funded before that.
Look it up in the CAFR 2016. Plan B Fire and Pension were left with funds in the trusts that were to meet more realistic assumptions and appear to be in much better state than Plan A or what the MERS past service liability tells us about the people who transferred. Time will tell.
JOHN You are a one trick pony, You have been beating this pension systems to death. What you have not ben saying are the politicians that get pensions after 10 years why is that?
I don’t for one minute believe that there are still over 700 people in plan A You don’t or they cant produce the numbers of widows that make up the plan and the actual number of actual police and fighter that are collecting their pension. How much money is this group paying for health care. I for one am sick of these fucking essay’s. Where is the action and follow thru for the print shop or PAL. What about the cops ad there outside OT lets tell whole story
My friend, Andy. The number of participants listed in the CAFR 2016 is 711. I did not make it up. Perhaps you would FOI the info if you doubt what I am telling you.
The most important thing is that Ganim with an “idea” or “concept” as Ken Flatto has recently called it, got Bridgeport to approve the scheme 18 years ago. How do we like the results today.
Tonight we faced the City Council again, before they are provided an opportunity to increase our debt by $90 Million, and asked them in three different sized boxes to tell us whether the pension liability we face is only $90 Million, or maybe $270 Million or when Plan A is considered, based on actuarial science and lousy investment returns, over $500 Million?
You know that I have reported multiple fictions we live in the City with a Mayor who fails to tell the truth and who has no public priorities, except that he sit first at the table and not be disturbed, especially by anyone outside his court. Have a good night’s sleep. Things may look better on Tuesday. Time will tell.
It’s always the pension that workers receive that is all the problems with the city and state. Connecticut offered enormous tax breaks to lure trading floors to Stamford, Connecticut. Its posh suburbs drew high earners out of New York. But the state was more dependent on the firms than the other way around, and the incentives never stopped. Eventually, low business taxes meant the state came to rely disproportionately on its wealthy residents.
Twenty-five years ago, amid economic turmoil and a looming budget crisis Governor Lowell Weicker made a fateful decision. Unsure of the best way to dig Connecticut out of its financial hole, Governor Lowell Weicker implemented an income tax. Between 1992 and 2014 (the most recent year for which Internal Revenue Service taxpayer data is available), Connecticut lost $12.36 billion in net adjusted gross income (AGI).
Currently, Connecticut has the third highest state and local tax burden in the country, the second highest property tax, and the eighth worst business climate. None of this had a Damn thing to do with the pensions of its workers, just the mismanagement of Connecticut by both parties.