Monday, June 27, 2011

US Local Governments Caught in Pension Death-Squeeze

Wages and benefits account for 30% of state general fund expenditures, according to data from the National Governors Association. But U.S. Census surveys show that in the typical town or school district, employee pay and benefits can consume from 70% to 80% of the budget.

Pensions are an enormous part of the problem. While pension payments now consume about 4% of state budgets, many municipalities are already spending 15% to 20% of their finances on pension costs.

...[in] Anaheim, pensions already account for 22% of its $252 million budget. San Jose's pension costs for police and firefighters have quadrupled in a past decade. Without reform, the city estimates that its yearly pension costs, $63 million in 2000, will swell to $650 million in 2015. _WSJ
These problems are exploding from California to Illinois to New York, and everywhere else where government employee unions hold a death's grip on state and local budget processes.

These skyrocketing rates of pension and benefit growth cannot be sustained for many more years. Angry -- and violent -- confrontations between taxpayers and government union thugs are likely to spread well beyond Madison, Wisconsin, and New Haven, Connecticut. In fact, virtually all of Mr. Obama's strongest support derives from special interests such as public employee unions and radical community and faux environmental groups. The combined agendas for each of these pillars of support for Mr. Obama toll a death knell for economic prospects for growth for US taxpayers individually and for the US as a whole.

If the voters of the world's sole superpower do not wake up soon to what is being done to them by their own government, they will eventually wake to find the sharp-wire strung around them in an ever tightening circle.


kurt9 said...

This means its time to sell any municipal bonds or mutual funds that own such if you have any.

al fin said...

Normally that would be true. With an Obama presidency, you never really know which state or municipality will be bailed out in a quid pro quo to reward government unions and collaborating officials.

Bondholders, of course, tend to get short shrift under the Obama agenda, unless they are considered inside cronies.

kurt9 said...

Bondholders, of course, tend to get short shrift under the Obama agenda, unless they are considered inside cronies.

Yes, the GM bondholders certainly took it in the shorts.

horos22 said...

al fin,

I see that my latest post about palin got lost somehow.

Could you possibly track it down and post it, or let me know otherwise so I can retype?