Category : Pensions

David Brooks–The Debt Indulgence

Every generation has an incentive to borrow money from the future to spend on itself. But, until ours, no generation of Americans has done it to the same extent. Why?

A huge reason is that earlier generations were insecure. They lived without modern medicine, without modern technology and without modern welfare states. They lived one illness, one drought and one recession away from catastrophe. They developed a moral abhorrence about things like excessive debt, which would further magnify their vulnerability.

Recently, life has become better and more secure. But the aversion to debt has diminished amid the progress. Credit card companies seduced people into borrowing more. Politicians found that they could buy votes with borrowed money. People became more comfortable with red ink….

Read it all.

Posted in * Culture-Watch, * Economics, Politics, City Government, Consumer/consumer spending, Economy, Ethics / Moral Theology, History, Pensions, Personal Finance, Politics in General, Psychology, State Government, Taxes, The National Deficit, The U.S. Government, Theology, Theology: Scripture

Incredible Chicago Tribune Exposé on Former Mayor Rich Daley's Pension Deal

The city of Chicago is near insolvency. City workers are bracing for pay and benefit cuts. And Rich Daley, the former mayor who had his behind kissed by the powerful in this town and by much of the media for two decades, has an inside deal that should make sane people sick to their stomachs:

An eventual pension of more than $180,000 for life, according to a Tribune/WGN-TV investigation.

Daley did it on the sneak, our reporters found….

Read it all.

Posted in * Culture-Watch, * Economics, Politics, City Government, Economy, Pensions, Personal Finance, Politics in General, Urban/City Life and Issues

(USA Today) Workers fear more cuts in retirement benefits

The economic recovery has not made Americans feel more secure about their financial future. In fact, many workers fear more cuts in retirement benefits and higher out-of-pocket health care costs, according to a survey by Towers Watson, a retirement consulting firm.

As a result of their worries, more than half, 55%, of workers say they are willing to give up some of their future pay increases in order to have more guaranteed income in retirement, the survey found. And 50% say they would also trade a portion of their pay to ensure health care benefits.

“This may reflect their firsthand experience with financial market volatility, continuing worries about the economy and fears of future cutbacks to benefits,” said Kevin Wagner, Towers Watson senior retirement consultant.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, Economy, Labor/Labor Unions/Labor Market, Pensions, Personal Finance, Psychology, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

U.S. workers fight loophole switch to uninsured church pension plans

Mary Rich worked for a hospital in northern New Jersey for 25 years, first as a registered nurse and later as an executive. One of the job’s benefits was a traditional pension that she expected to receive at retirement. Now that benefit seems unlikely to be around by the time she retires.

Rich’s financially troubled former employer, the Hospital Center at Orange (HCO), shut down in 2004. The pension plan currently has $5.25 million in assets, which are being distributed at the rate of $2.7 million per year. By the time Rich reaches retirement 12 years from now, the money will be gone.

Under normal conditions, a pension plan such as HCO’s would have been back-stopped by the Pension Benefit Guarantee Corporation, the federally sponsored agency that insures most private sector pension plans. When plans go belly up, PBGC takes them over and continues to make payments; most participants receive 100 percent of promised benefits. But HCO’s case wasn’t typical. A year before it closed, HCO had declared itself to be a “church plan” ”“ meaning that it was claiming an exemption to federal pension law and PBGC coverage.

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Posted in * Culture-Watch, * Economics, Politics, Economy, Labor/Labor Unions/Labor Market, Law & Legal Issues, Pensions, Personal Finance, Religion & Culture

Ottawa’s pension liabilities understated by $80-billion: report

The federal government is understating the liability for its employee pension plans by $80-billion because it does not use “real world” investment returns in its calculation, a new report says.

A C.D. Howe Institute study has concluded the federal liability for pension plans now totals $227-billion, which is $80-billion more than the government reports in its Public Accounts.

“Ottawa’s calculations do not reflect investment returns available in the real world,” says co-author William Robson, who is CEO of the C.D. Howe Institute.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Aging / the Elderly, Canada, Economy, Labor/Labor Unions/Labor Market, Pensions, Personal Finance, Politics in General

(Reuters) Retirement Crisis Closes In on Baby Boomers

Like many middle-class American baby boomers, Linda Carmona-Sanchez is anxious about slipping into poverty and says whatever dreams she once had about retirement in her “golden years” have turned into nightmares.

“We don’t value people here in this country, and we value you less if you’re not healthy and strong,” Carmona-Sanchez, 55, said.

“To me it would almost be a welcome blessing to know that I would die rather than to be old and have to live in poverty,” she said.

Her anxiety is widespread….

Read it all.

Posted in * Culture-Watch, * Economics, Politics, Aging / the Elderly, Consumer/consumer spending, Economy, Middle Age, Pensions, Personal Finance

(London Times) Simon Lewis–Why the financial Transaction Tax is a bad idea

A financial transaction tax would be the wrong choice for Europe at any time; and particularly now.

To understand the impact of FTT, we need to answer four essential questions. Is it an efficient means of raising tax revenue? Would it benefit the end-users of the financial markets, both businesses and consumers? Would it enable the creation of economic growth and jobs? And would it make financial markets more stable?

First, financial services is a mobile, global and highly competitive sector. The European Commission’s suggests that Europe would lose 10 per cent of its securities market, 40 per cent of its spot currency market and 70 to 90 per cent of its derivatives market if FTT were introduced.
These are alarming numbers and economically very damaging ”” and they are not mere conjecture. Sweden’s FTT (from 1984 to 1991), resulted in between 90 and 99 per cent of traders in bonds, equities and derivatives moving from Stockholm to London. This was an expensive lesson for Sweden. Its experience should prevent Europe from making a similar mistake.

Second, what will be the impact on users of financial markets, including ordinary consumers? Economic theory suggests that a transaction tax would largely be passed on to end-users, whether they are savers, investors or businesses. The European Commission itself makes this point.

Read it all (requires subscription).

Posted in * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Economy, England / UK, Pensions, Personal Finance, Stock Market, Taxes

South Carolina Teachers, state workers would pay more for retirement ”” at a cost

South Carolina’s teachers and state employees are willing to pay more to fix the retirement system ”” but only if they get a raise first.

That’s the plan endorsed by the S.C. State Employees Association and the S.C. Education Association, which together represent 30,000 of the state’s 141,000 teachers and state employees.

The plan, which the groups submitted in writing to House and Senate subcommittees studying the retirement system, says teachers and state employees are willing to increase their contribution to the retirement system by 0.5 percent, but only if they receive at least a 2 percent raise ”” a “cost-of-living adjustment” for state employees and a “step increase” for teachers.

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Posted in * Culture-Watch, * Economics, Politics, * South Carolina, Economy, Education, Labor/Labor Unions/Labor Market, Pensions, Personal Finance, Politics in General, State Government, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Rhode Island–The Little State With a Big Mess

After decades of drift, denial and inaction, Rhode Island’s $14.8 billion pension system is in crisis. Ten cents of every state tax dollar now goes to retired public workers. Before long, Ms. Raimondo has been cautioning in whistle-stops here and across the state, that figure will climb perilously toward 20 cents. But the scary thing is that no one really knows. The Providence Journal recently tried to count all the municipal pension plans outside the state system and stopped at 155, conceding that it might have missed some. Even the Securities and Exchange Commission is asking questions, including the big one: Are these numbers for real?

“We’re in the fight of our lives for the future of this state,” Ms. Raimondo said in a recent interview. And if the fight is lost? “Either the pension fund runs out of money or cities go bankrupt.”

Read it all.

Posted in * Economics, Politics, Economy, Pensions, Personal Finance, Politics in General, State Government, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

David Briggs on Clergy, Pensions, retirement, the Economy and the Church

Like their secular counterparts, many clergy who devoted their attention to less temporal matters than financial planning now find themselves amid shrinking church budgets and a poor economy being forced to work beyond traditional retirement ages.

It is an especially critical issue in smaller churches that still do not set aside money for clergy retirement. In a 2008 study of Church of Christ clergy in Texas, just a quarter of respondents said they had plans to fully retire.

But it is also a burden for larger, mainline Protestant denominations. As memberships shrink and many older clergy find it financially untenable to retire, even fewer younger clergy are able to find work.

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Posted in * Christian Life / Church Life, * Culture-Watch, * Economics, Politics, Aging / the Elderly, Credit Markets, Economy, Ministry of the Ordained, Parish Ministry, Pensions, Personal Finance, Stewardship, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(Globe and Mail) Neil Reynolds: Family breakdown is one cause of our economic woes

The wealth of nations, the [Social Trends Institute] report says, is inextricably associated with the health of families. And, amongst other factors, the global retreat from marriage and from family has depressed economic growth and has deeply hurt two generations of children.

“Evidence drawn from Europe and North America indicates that children who are raised in an intact married home are more likely to excel in school and be active in the labour force as young adults,” the report says. “An abundant social-science literature, as well as common sense, supports the claim that children are more likely to flourish, and to become productive adults, when they are raised in stable, married-couple households.” Yet, with the global decline of these households, “the sustainability of humankind’s oldest organization, the family ”“ the fount of fertility, nurturance and human capital ”“ is now an open question.”

The report cites studies that indicate that American children who are raised outside of “an intact married home” are two to three times more likely to suffer serious social and psychological problems….

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Aging / the Elderly, Canada, Children, Consumer/consumer spending, Corporations/Corporate Life, Economy, Marriage & Family, Pensions, Personal Finance, Politics in General, Psychology, Social Security, The U.S. Government

(WSJ) David Reilly–The lunacy of pension funds continuing to believe in 8% Annual returns

Stocks are getting pummeled as the prospect of a global slowdown increases. The S&P 500 is now down more than 10% year-to-date. Meanwhile, already superlow bond yields are getting even lower, thanks to the Federal Reserve’s latest extraordinary easing action. The 30-year U.S. Treasury bond at one point on Thursday yielded less than 2.8%.

That is the kind of one-two punch that will worsen pension deficits while also making the contributions required to fill holes even bigger. This could crimp earnings and cash flow at some publicly traded companies while putting already strained state and local-government plans under even greater pressure. In turn, this could be another weight on markets and add to further economic uncertainty.

And, if nothing else, the market’s current malaise again highlights the lunacy of both public and private pension funds continuing to believe on average that they can generate annual returns of 8%.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, Corporations/Corporate Life, Credit Markets, Economy, Pensions, Personal Finance, Psychology, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(Western Mail) Church in Wales looks at pension rights for clerics’ partners

The Church in Wales will next week consider taking a further step towards equality for gay clerics by providing improved pension rights for their civil partners.

But progressive elements in the Church remain uneasy that while there is an acceptance that priests can have a monogamous sexual relationship, the same tolerance does not extend to Bishops.

During a two-day meeting starting on Wednesday of the Church’s Governing Body, it will be recommended that surviving civil partners of retired clerics should receive a pension based on the priest’s entire working life. Until now, the rate of pension has only been calculated from 2005, when civil partnerships were first allowed.

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Posted in * Anglican - Episcopal, * Christian Life / Church Life, * Culture-Watch, * Economics, Politics, --Civil Unions & Partnerships, Anglican Provinces, Church of Wales, Economy, Ministry of the Ordained, Parish Ministry, Pensions, Personal Finance, Sexuality

South Carolina retirement system's funding mess leaves workers worried

Retirement plans and living standards for nearly half a million South Carolinians are in the hands of state politicians.

On the line are cost-of-living increases, the number of years public employees must work before they earn retirement pay and future contribution rates, all of which stand to change as the state’s top elected officials try to figure out a way to deal with the retirement system’s $17 billion funding mess.

Risky investment strategies and too-generous retirement benefits over the years coupled with the recession have been blamed by fiscal watchdogs as the reason the state’s pension plan has long-term stability problems.

Read it all from the front page of the local paper.

Posted in * Culture-Watch, * Economics, Politics, * South Carolina, Aging / the Elderly, Credit Markets, Economy, Labor/Labor Unions/Labor Market, Pensions, Personal Finance, Politics in General, State Government, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(Bloomberg) ”˜Dire’ Finances Force Rhode Island City Into Bankruptcy

“The current situation is dire, and necessitates decisive steps to put the city back on a path to solid financial footing and future prosperity,” Governor Lincoln Chafee, who joined Flanders in announcing the bankruptcy petition today, said in the statement. “We will be exploring all options to provide quality services at an affordable cost to all taxpayers.”

Central Falls, a city of about 18,000 located about 6 miles (9.7 kilometers) north of Providence, is the fifth municipal entity to file for bankruptcy this year, compared with six in all of 2010, according to data compiled by Bloomberg. The filing followed last week’s move by lawmakers in Jefferson County, Alabama, to postpone a vote on proceeding with what would be the biggest U.S. municipal bankruptcy.

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Posted in * Economics, Politics, City Government, Economy, Pensions, Personal Finance, Politics in General, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

A Small City’s Depleted Pension Fund Rattles Rhode Island

The small city of Central Falls, R.I., appears to be headed for a rare municipal bankruptcy filing, and state officials are rushing to keep its woes from overwhelming the struggling state.

The impoverished city, operating under a receiver for a year, has promised $80 million worth of retirement benefits to 214 police officers and firefighters, far more than it can afford. Those workers’ pension fund will probably run out of money in October, giving Central Falls the distinction of becoming the second municipality in the United States to exhaust its pension fund, after Prichard, Ala.

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Posted in * Economics, Politics, City Government, Economy, Labor/Labor Unions/Labor Market, Pensions, Personal Finance, Politics in General, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(SMH) Ross Gittins–The West heads to a Greek tragedy, too

The major advanced economies should not just be worried about Greece, it said, they should be worried about themselves. If the huge debt levels of the major economies prompt the world financial markets to wonder if those debts will be honoured, so that the markets take a set against sovereign debt in general, the majors, too, will be in big trouble.

But as the British economist Dr Diane Coyle reminds us in her new book, The Economics of Enough, it is worse than that.

We have known for years that the major advanced economies are facing immense pressure on their budgets from the ageing of their populations. They are committed to generous pension payments and healthcare spending for their retiring baby boomers at a time when, for many countries, their populations will be falling.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Aging / the Elderly, America/U.S.A., Economy, England / UK, Europe, Greece, Health & Medicine, Pensions, Personal Finance, Politics in General, Taxes

The Economist Leader–Current plans to raise the retirement age are not bold enough

Put aside the cruise brochures and let the garden retain that natural look for a few more years. Demography and declining investment returns are conspiring to keep you at your desk far longer than you ever expected.

This painful truth is no longer news in the rich world, and many governments have started to deal with the ageing problem. They have announced increases in the official retirement age that attempt to hold down the costs of state pensions while encouraging workers to stay in their jobs or get on their bikes and look for new ones.

Unfortunately, the boldest plans look inadequate. Older people are going to have to stay economically active longer than governments currently envisage; and that is going to require not just governments, but also employers and workers, to behave differently.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Aging / the Elderly, Budget, Economy, Europe, Pensions, Personal Finance, Politics in General, Social Security, The U.S. Government

Stephen Moore–The Proportion of the American Workforce Related to Government is Distressingly Large

If you want to understand better why so many states””from New York to Wisconsin to California””are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

Every state in America today except for two””Indiana and Wisconsin””has more government workers on the payroll than people manufacturing industrial goods.

Read it all.

Posted in * Economics, Politics, * International News & Commentary, America/U.S.A., Budget, City Government, Economy, Labor/Labor Unions/Labor Market, Pensions, Personal Finance, Politics in General, State Government, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

(USA Today) More workers have a gloomy retirement outlook

More workers are pessimistic about their retirement future than at any time in the past two decades, according to the Employee Benefit Research Institute 2011 Retirement Confidence Survey.

The percentage of workers who are not at all confident about saving enough money for a comfortable retirement reached 27% in 2011, compared with 22% last year. When combined with those who said they are not too confident, the total reaches 50% of workers.

“That is sobering,” says Greg Burrows, senior vice president of retirement and investor services at the Principal Financial Group, a partner with the EBRI survey. “Hopefully this will spur some action.”

Read it all.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Aging / the Elderly, America/U.S.A., Corporations/Corporate Life, Economy, Labor/Labor Unions/Labor Market, Middle Age, Pensions, Personal Finance, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(NY Times) The Burden of Pensions on States

Coming up with bigger contributions to pension funds will require states to make difficult choices about the size of their work forces, their commitment to public services and the viability of their employee benefits, which are often said to be irreversible and protected by state constitutions.

“The amount they have to be contributing could potentially be two to three times as much as they’re contributing now,” said Joshua Rauh, an associate professor of finance at Northwestern University, who has been challenging the way most cities and states measure their pension promises. “If you don’t want to count on the stock market to pay for all this, this is what you’re going to have to contribute.”

Mr. Rauh and a number of other analysts say the states’ biggest problem has been a failure to understand how much benefits will really cost. Instead of the states’ models, these analysts have come up with alternatives that more closely approximate those used by insurance companies.

Read it all (emphasis mine).

Posted in * Economics, Politics, Economy, Labor/Labor Unions/Labor Market, Pensions, Personal Finance, Politics in General, State Government, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(NY Times) Pension Funds Strained, States Look at 401(k) Plans

Lawmakers and governors in many states, faced with huge shortfalls in employee pension funds, are turning to a strategy that a lot of private companies adopted years ago: moving workers away from guaranteed pension plans and toward 401(k)-type retirement savings plans.

The efforts come as the governors of Wisconsin and Ohio, citing dire budget problems, are engaged in bitter showdowns with public-employee unions over wages, pensions and collective bargaining rights.

The new plans allow states to set a firm, upfront limit on the amount they will contribute and leave it up to the employee and the financial markets to make the money grow. In a traditional pension system, the employer promises a certain benefit, then must find a way to pay for it.

Read it all.

Posted in * Economics, Politics, Economy, Pensions, Personal Finance, Politics in General, State Government, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(WSJ) Retiring Baby Boomers Find 401(k) Plans Fall Short

The 401(k) generation is beginning to retire, and it isn’t a pretty sight.

The retirement savings plans that many baby boomers thought would see them through old age are falling short in many cases.

The median household headed by a person aged 60 to 62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain its standard of living in retirement, according to data compiled by the Federal Reserve and analyzed by the Center for Retirement Research at Boston College for The Wall Street Journal. Even counting Social Security and any pensions or other savings, most 401(k) participants appear to have insufficient savings. Data from other sources also show big gaps between savings and what people need, and the financial crisis has made things worse.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, Aging / the Elderly, Economy, Middle Age, Pensions, Personal Finance, Social Security, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government

Ohio Teachers Agree to Retirement Age Increase to Keep Pensions

Ohio public school teachers would pay a larger share of their retirement costs, work until they’re older and see pension benefits cut under changes approved Thursday that aim to keep their primary pension fund solvent by saving $10.9 billion.

The State Teachers Retirement System board approved a host of changes to the benefit program that serves the bulk of the pension fund’s 470,000 members. The changes must be approved by lawmakers and the governor.

Spokeswoman Laura Ecklar said the package marks the end of a two-year effort to find a way to keep the pension fund afloat for the long haul.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, City Government, Economy, Education, Pensions, Personal Finance, Politics in General, State Government, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

The Economist–The battle ahead on public sector unions

“Industrial relations” are back at the heart of politics””not as an old-fashioned clash between capital and labour, fought out so brutally in the Thatcherite 1980s, but as one between taxpayers and what William Cobbett, one of the great British liberals, used to refer to as “tax eaters”. People in the private sector are only just beginning to understand how much of a banquet public-sector unions have been having at everybody else’s expense…. In many rich countries wages are on average higher in the state sector, pensions hugely better and jobs far more secure. Even if many individual state workers do magnificent jobs, their unions have blocked reform at every turn. In both America and Europe it is almost as hard to reward an outstanding teacher as it is to sack a useless one.

While union membership has collapsed in the private sector over the past 30 years (from 44% of the workforce to 15% in Britain and from 33% to 15% in America), it has remained buoyant in the public sector. In Britain over half the workers are unionised. In America the figure is now 36% (compared with just 11% in 1960). In much of continental Europe most civil servants belong to unions, albeit ones that straddle the private sector as well. And in public services union power is magnified not just by strikers’ ability to shut down monopolies that everyone needs without seeing their employer go bust, but also by their political clout over those employers.

Read it all.

Posted in * Economics, Politics, Economy, Labor/Labor Unions/Labor Market, Pensions, Personal Finance, Politics in General, State Government, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government

Ohio sues Wells Fargo over pension fund loss

An Ohio pension fund has sued Wells Fargo & Co to recover losses suffered when a bank that it bought put the fund’s money into a risky investment vehicle that failed.

The School Employees Retirement System of Ohio, represented by state Attorney General Richard Cordray, said it lost $29.6 million because a unit of Wachovia Corp mismanaged a securities lending program marketed as a “low-risk” way to boost returns.

Read it all.

Posted in * Culture-Watch, * Economics, Politics, Economy, Education, Law & Legal Issues, Pensions, Personal Finance, Politics in General, State Government, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

George Will–Public pensions' reckoning

A study by Northwestern University’s Kellogg School of Management calculates the combined underfunding of pensions in all municipalities at $574 billion. States have an estimated $3.3 trillion in unfunded pension liabilities.

Nunes says 10 states will exhaust their pension money by 2020, and all but eight states will by 2030.

States’ troubles are becoming bigger. Hitherto, local governments have acquired infusions of funds from federal budget earmarks, which are now forbidden. Furthermore, states are suffering “ARRA hangover” – withdrawal from the American Recovery and Reinvestment Act, aka the 2009 stimulus.

There are legal provisions for municipalities to declare bankruptcy. Some have done so. As many as 200 are expected to default on debt next year. There are, however, no bankruptcy provisions for states.

Read it all.

Posted in * Economics, Politics, City Government, Consumer/consumer spending, Corporations/Corporate Life, Economy, Labor/Labor Unions/Labor Market, Pensions, Personal Finance, Politics in General, State Government, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government

(WSJ) In Cities Across the Country, Pensions Push Taxes Higher

Cities across the nation are raising property taxes, largely citing rising pension and health-care costs for their employees and retirees.

In Pennsylvania, the township of Upper Moreland is bumping up property taxes for residents by 13.6% in 2011. Next door the city of Philadelphia this year increased the tax 9.9%. In New York, Saratoga Springs will collect 4.4% more in property taxes in 2011; Troy will increase taxes by 1.9%.

Property-tax increases aren’t unusual, in part because the taxes are among the main sources of local revenue. But officials say more and larger increases are taking hold. “This year we have seen a dramatic increase in our cities and towns having to increase property taxes” for pensions and other expenses, said Jack Garner, executive director of the Pennsylvania League of Cities and Municipalities.

Read it all.

Posted in * Economics, Politics, City Government, Economy, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Pensions, Personal Finance, Politics in General, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Alabama Town’s Failed Pension Is a Warning

…the declining, little-known city of Prichard is now attracting the attention of bankruptcy lawyers, labor leaders, municipal credit analysts and local officials from across the country. They want to see if the situation in Prichard, like the continuing bankruptcy of Vallejo, Calif., ultimately creates a legal precedent on whether distressed cities can legally cut or reduce their pensions, and if so, how.

“Prichard is the future,” said Michael Aguirre, the former San Diego city attorney, who has called for San Diego to declare bankruptcy and restructure its own outsize pension obligations. “We’re all on the same conveyor belt. Prichard is just a little further down the road.”

Many cities and states are struggling to keep their pension plans adequately funded, with varying success. New York City plans to put $8.3 billion into its pension fund next year, twice what it paid five years ago. Maryland is considering a proposal to raise the retirement age to 62 for all public workers with fewer than five years of service.

Illinois keeps borrowing money to invest in its pension funds, gambling that the funds’ investments will earn enough to pay back the debt with interest. New Jersey simply decided not to pay the $3.1 billion that was due its pension plan this year.

Read it all.

Posted in * Economics, Politics, City Government, Economy, Pensions, Personal Finance, Politics in General, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Post-Gazette Editorial–End this circus: The mayor and council must fix the pension fund

Now the city faces a rare and crippling crisis. On Jan. 1 city property values will decline immediately because higher taxes will be needed to stabilize its pension fund. All of that will occur because the state, in the new year, will be able to take over the pension plan since the mayor and council are nowhere near a deal that will deliver the $200 million-plus needed to bring the plan up to 50 percent funded, from the current 29 percent.

That takeover will mean the city will be forced by the state to pay much higher contributions into the fund year after year. The state doesn’t care where the money comes from — even if it means sharply higher taxes — only that the city shore up its pension program.

City Council members keep saying that such a hit won’t come for years, but that lackadaisical attitude is part of the reason they and the mayor have failed to find a compromise.

Read it all.

Posted in * Economics, Politics, City Government, Economy, Pensions, Personal Finance, Politics in General, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--