New budget accounting rules that went into affect in 2018 for state budget reporting shows a grim financial picture.
Here’s more from Chief Investment Officer:
Unfunded retirement liabilities are the main contributing factor to state-level debt, according to a new report from conservative think tank Truth in Accounting (TIA). Pension debt accounts for approximately $824 billion of the estimated total $.5 trillion of unfunded liabilities in US states.
The report said that despite a robust economy in 2018 that lowered total debt among all states by $62.6 billion, there were 40 states that did not have enough money to pay all of their bills as of the end of the fiscal year 2018.
“This means that to balance the budget – as is supposedly required by law in 49 states,” said the report, “elected officials have not included the true costs of the government in their budget calculations.”
In calculating the rankings of the US states TIA divides the amount of money needed by a state to pay bills by the number of state taxpayers to come up with what it calls the “Taxpayer Burden.” And if a state has money available after all bills are paid, then that surplus amount is also divided by the number of taxpayers to come up with the “Taxpayer Surplus.”
Question to ponder: Will private citizen taxpayers feel much grief for local/state workers having to take a pension check reduction when the pension bomb hits? Meaning, cuts have to come at some point and I doubt taxpayers will let road maintenance be cut while retired government worker John Smith still receives a full pension check. Will pension check retired workers turn on social welfare program recipients for budget cuts?
State budget debates will definitely heat up at some point. Where actual cuts come from will be something to watch for.