Monday, December 21, 2009

Municipalities facing pension tsunami

     The following was from an article in today's local news paper.  For years my husband has been saying at the very end one person will receive a bill for 6mill dollars and only then will this come tumbling down.  Well, it is not so funny and time is running out.  We should be doing pension reform now, how are we of small jobs and smaller wages to continue to pay government wages and government pensions when the private sector jobs are shrinking and government jobs are increasing? It is just like what is happening in Washington;  it is not their money and they have to stop spending it because we don't have anymore of it to give.....  Read on...............






Massachusetts cities and towns, like those in other states, are about to be hit with significant increases in their pension costs. Without major changes in the public employee pension system, these increases threaten to sink municipal budgets in the coming years.
This gathering storm is due to a state mandate that cities and towns fully fund their workers' pensions by 2030. This means that there must be enough money in the system by that date to pay municipal workers' pensions if they all cashed out at the same time.
The full-funding deadline was already a burden on communities' budgets before the recession struck. But the stock market collapse hit pension funds hard, placing cities and towns in an even deeper hole.
It would help if the full-funding deadline were extended. The Legislature next month is expected to consider a proposal to move the deadline to 2040.
But that's only a partial solution.
"It's just not responsible to kick it another 10 years out so we have another generation of taxpayers paying the burden," Michael Widmer, president of the Massachusetts Taxpayers Foundation, told a reporter recently.
He's right. What's needed is real pension reform, not the half-measures legislators and Gov. Deval Patrick trumpeted last summer.
As has been noted here previously, Republican gubernatorial candidate Charlie Baker's proposed pension reforms are a good start. He wants to cap pensions at $90,000 and end the practice of calculating them based on the employee's maximum salary over three years. His plan would base pensions on the average salary over the course of the employee's career, adjusted for inflation.
Baker also wants an increase in the minimum retirement age for public employees from 55 to 60.
Public-sector pay has continued to go up and while private-sector salaries have stagnated. A recent report noted that federal employee salaries now average $71,206 compared to an average of $40,331 in the private sector.
Without reform, we'll soon have a majority of retired public employees receiving more in pensions than the wages of the private-sector employees who are working to support them.


Without reform, we'll soon have a majority of retired public employees receiving more in pensions than the wages of the private-sector employees who are working to support them.

1 comment:

  1. We have a similar problem in Springfield, MO. They just increased the sales tax rates to make up their pension shortfalls. Just what the economy needs--more taxes.

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