Retiree health care may overwhelm gov'ts

[REWahoo]

http://news.yahoo.com/s/ap/20060924/ap_on_he_me/retiree_health_care_2

SAN FRANCISCO (AP) - The bill is coming due for years of generous benefits bestowed upon the nation's public employees, and it's a stunner: hundreds of billions of dollars over the next three decades, threatening some local governments with bankruptcy and all but guaranteeing cuts in services like education and public safety.

This staggering burden is coming to light because of new accounting rules ...issued by the Government Accounting Standards Board.

...When the new accounting rules take effect in 2008, taxpayers will be able to see for the first time just how much they're paying to provide benefits to active and retired state and local public employees.

...California, New York, and Maryland appear to have the biggest burdens, but that could change when estimates begin trickling in from Florida, Texas, Illinois and Pennsylvania.

...Last month, JP Morgan released what it considers the most comprehensive preliminary estimate. It projects the present value of unfunded health care and other non-pension benefits at between $600 billion and $1.3 trillion.

...By comparison, the debt rating agency Standard and Poors estimates the country's total unfunded public pension debt at around $285 billion.

..."There's a good chance some government entities are going to go bankrupt," said California Assemblyman Keith Richman, a Republican from Chatsworth. "But the issue isn't just bankruptcy, it's governments dying of a thousand cuts in services. The costs of promises that have been made are going to be astronomical."

...At the least, experts say, the public can expect increased taxes and fees or reduced public safety and public works services as governments adjust their budgets to amortize the debt.

 

[greg]

Wahoo!: Yep, yep, yep. I guess it's just a very slow kaa-booooooooooom.

 

[modlair]

This is a pretty big deal. I had thought awareness would be delayed, but apparently a law is on the books that forces full disclosure and that disclosure is going to generate consciousness in the voters.

I don't think this is going to unfold particularly political. What I would think is more likely is the electorate will not allow legislators to pay better health care or pension benefits than exist in the private sector. With no tax increases permitted, the next move would be bond issues, but the electorate won't allow that either.

Then the courts will get involved and it will be discovered that the airlines set a profoundly powerful precedent. If there is no money, it cannot be paid -- regardless of promises.

And so things will rein in to some tolerable middle ground.

The revelation of the article is not really so much the numbers themselves, but just how very quickly they are coming to light. I had thought there would be years before visibility was high enough to affect public policy. Apparently not.

 

[greg]

This is a pretty big deal. I had thought awareness would be delayed, but apparently a law is on the books that forces full disclosure and that disclosure is going to generate consciousness in the voters.

Our city has approx. a $100 million deficit ( discovered so far), much of it from prior administrations. He said he will not run for re-election and spend the rest of his term working on this problem. It's so important to him that he doesn't want to be too influenced by political ramifications and fallout from decisions. This is a good thing as far as I can tell. I might write him in as a candidate if he accomplishes something worthwhile.

 

[Spanky]

It's pretty certain the government will either raise tax or issue more bonds as band-aids for budget crisis. The public school district of our city issued a referendum for an increase of property tax and received an approval. Now we are paying higher property tax. It would be interesting to see a disclosure of what the local government is paying for pensions and health care for retired fire fighters, police officers, and city officials.

 

[Telly]

The big boot has been kicking around the private sector for a while now.  Soon it will be kicking around the government sector local/county/state, then finally federal. Welcome to the club, govies!

I know there has been some thinking that with government, you can never go wrong, just raise taxes! That will be a tough sell to people in the private sector who have seen their retirement medical terminated before they got to it, their pension plans frozen, etc. Many aren't interested in hearing anybody wail "it's not fair, it's not fair", after they have had to settle for a lot less themselves.  When this whole globalization thing finally runs through all sectors, I don't think there will be many golden boys left anywhere.

Let us not forget State Universities, either, with the big boot.

It's just the big wheel turning...