Many States are bound by laws that make it impossible for them maintain budget deficits. However, that hasn't stopped them from promising money they don't have. It has become increasingly clear that states have created another fiscal problem very much similar to what EU Nations are facing. Currently the books say states are behind by about $1 Trillion but a more reasonable estimate is $3.2 Trillion (States only have $2 Trillion in total assets).If you includes municipalities it's another $.5 Trillion!
Needless to say with these defined benefit programs the difference is being passed on to the future citizens who will have to either make up the difference in dramatically higher taxes or face similar situations that we've seen recently in Greece and Ireland.
The smart thing to do would be to address this problem today. Redefine these programs to defined contributions and cap excessive retirement payouts to wealthy state employees and double dippers. The longer we wait the worse the problem will become because most states and municipalities are already overstretched.
Just one more ponzi scheme unloaded on the taxpayer by dishonest politicians. Take a number!
State and Local Government Sponsored Pensions in the hole for $3.5 Trillion - (Video) Fox Business News
The Liabilities and Risk of State Sponsored Pension Plans - Kellogg School of Management Northwestern University
Pension in Peril - Article in Kellogg Insight
States take a "Pension Holiday" and don't pay into pensions - Article in Fortune
**** Update ****
The government solution to the pension problem is becoming clear for the politicians... declare bankruptcy! Newt Gingrich has a proposal! Allow states to go bankrupt! Of course the pensions will be wiped out... but the politicians can keep spending.
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