Posted on by Californiacontrarian

What If?

Humor me while we play a little game of “What if.”

What if someone sent you a letter, or an email, or came to your front door and told you that you and every member of your family owed $25,166! Of course your initial response would be something along the lines of, “#&+*<^¥€§x!! No way! What kind of scam is this?”
But what if this preposterous debt was on the up-and-up. What if you checked with your neighbors and your local family members and they had all received a similar notification. And finally, what if your lawyer and your accountant both confirmed not only was your debt a fact, but also that it was steadily increasing.
And to make matters worse, what if your state was the one to whom you owed this money! “How could this be? I pay my taxes. I have never borrowed any money other than my home mortgage.”
Well actually you owe this money because the state in which you live owes this money to those that have a public pension plan, and thus far the courts have ruled that the states cannot weasel out of this.
A 2017 study, “Hidden Debt, Hidden Deficits,” pointed out that almost every state and local government has an unbalanced budget, mainly due to runaway pension fund costs. The total deficit is $167 billion . . . note that is billion with a B! And this pension fund deficit is getting worse. In an April 2017 article Forbes stated, “There is no way that U.S. pension funds can keep promises to the next wave of retirees!”
The Heritage Foundation noted that in 2017 the unfunded liability of state and local government pension plans increased significantly despite a solid year of investment returns. In that same article all of the states were listed in order with their accompanying per capita liability. On this list California ranked 39th with Alaska being ranked the worst at 50. In California, where I live, the per-capita unfounded liabilities of public pension plans was $25,166 as of December, 2017. (Note that this is “per capita” and California has almost 40 million people!) But those that live in California are not alone. Every state is underfunding their public pension plans, just not to the same extent. Those in Tennessee only owe $7601 per person, while in Alaska, the state ranked the worst at number 50, each person owes $45,689 (population of Alaska is only 700,000+). As one would expect five of the bottom seven (states that are the deepest in the hole as to per capita debt) are the usual Democrat strongholds of Hawaii, New Jersey, New Mexico, Illinois, and Connecticut.
Okay enough of “What if!”
The question now should be, “What can we do about it?
State tuned!

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