The state’s debt is worse than it appears, according to an accounting group. The state’s debt it $175 billion, $146 billion of which is for pensions and retiree benefits not currently funded, and $109 billion of which the state doesn’t report, according to the group Truth in Accounting. Executive Director Sheila A. Weinberg says it’s probably more, because the state is using unrealistic probabilities for life expectancy of retirees and rate of investment return.
Click here for summary
“In 2015, the next statements that are issued, these numbers are going to be re-cast to be even more realistic than they are, and I anticipate that they will at least double the unfunded liabilities at that point in time,” she said.
She says the current administration is setting aside the money required by law for pensions, in a way past administrations did not. However, the law is still short of the actuarial need – it’s 72 cents on the dollar for the Teachers Retirement System – and as a result, the unfunded liability grew by $6.6 billion last year.
The state’s operating budget was roughly balanced last year, notwithstanding the pension contributions.
Weinberg characterizes governors and lawmakers, present and past, as irresponsible for not dealing squarely with the true cost of government, including the benefits promised to employees, by either raising taxes or cutting spending elsewhere to pay for the cost.
Each taxpayer’s share of the debt burden is $43,200, which Weinberg equates to credit card debt: It doesn’t have to be paid off this instant, but it’s a debt that will be there until it’s paid off, and it’ll get bigger, even with no new spending, unless the state makes the actuarially required “minimum payment.”