Federal unfunded pension liabilities are soaring. But as states deal with their own pension troubles, public services take a major hit.
Between 2008 and 2012, the state of California saw a 17 percent increase in local governments’ pension spending while tax revenue increased a meager four percent. As city officials scramble to handle the backlash from introducing pension reform ballot measures, few believe the effort will be met with enthusiasm. According to the Mercatus Center’s latest research on the fiscal condition of the states, California may not have all the time in the world before its downfall
The research points out factors like pension liabilities and other spending commitments linked to Medicaid and other health care benefits seem to present a heavy burden to taxpayers, and California is one of the 14 states without enough cash on hand to cover short-term liabilities.
In Gov. Jerry Brown’s 2014-15 budget, officials claimed the state’s ‘wall of debt’ amounted to $26.2 billion. Short-term debts account for most of the debt total, according to officials. Payments to community colleges, schools, and the state’s Medicaid program are named as those mainly responsible for said short-term debts.
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