And there it is. The liberals and unions never want to deal with the cold hard facts of our economic situation. This is not just a Pennsylvania problem. Every state, municipality and school district in the country has this problem. Even using the ridiculous annual return assumption of 8%, the Pennsylvania government pension plan is underfunded by $41 billion. Using the real return rate of 4% will add tens of billions to that number.
I pay approximately $4,000 per year in real estate taxes. In order to fund the government worker pensions, EVERY household in PA would have to pay $9,000 more per year in real estate taxes. Talk about trying to get blood from a stone. If you are a government worker who thinks taxpayers are going to fund your gold plated retirement by having their taxes double or triple, you are living in a dream world. If the unions and politicians refuse to see the writing on the wall, municipal bankruptcies will proliferate across the land and they will see their pensions go up in smoke.
Pa. pension crisis is ‘tapeworm’ of state budget
Sunday, January 13,2013
GOV. TOM CORBETT likens Pennsylvania’s public pension problem to a tapeworm, a parasite that devours new revenue as fast as an improving economy can create it.
“We have to consider everything,” in fixing the problem; it’s the “tapeworm of the budget,” he told a Digital First Media editorial board meeting last week.
Corbett called pension reform the one thing he seeks to accomplish this year. Property tax reform, he says, will have to wait.
Corbett’s call to action is not without merit. The public pension drain has escalated to a crisis in Pennsylvania with nearly $700 billion in year-over-year cost growth robbing state coffers of 62 percent of any new revenue.
In recent years, both the state employees fund (SERS) and public school employees fund (PSERS) have accrued unfunded liability amounting to billions of dollars a year, according to Charles Zogby, secretary of the budget. The funds’ current unfunded liability is $41 billion, not including future shortfalls.
Just to get the funds back on good footing would require a tax increase of $9,000 on every household in Pennsylvania, Zogby said.
The story of how Pennsylvania’s public pensions got to this point can be explained, but not without pain. It’s a story of generous benefit increases without correponding changes to contributions. It’s a timeline of “kicking the can down the road,” as Zogby puts it, intentionally underfunding the systems and pushing the liability into the future. In 2001, the Legislature moved to enhance member benefits by increasing the multiplier that calculates pension amounts. In 2002, employer contributions from school districts and government were capped. In 2003, Act 40 was passed to restrain future growth in employer contributions.
AND, THROUGHOUT that time period, investment growth was nil, sending the funds into a downward spiral.
Unlike 401(K) or private investment funds, a defined benefit pension plan maintains a liability in payout no matter what happens to the fund’s investments. While SERS and PSERS fell in value, liabilities grew. And the tapeworm grew, too.
While the path that brought us here is obvious, the way out is more clouded.
The reform floated most often is moving away from a defined benefit plan to defined contribution, a proposal that was part of a 2010 pension reform package which did not go far enough. Zogby says state officials are looking closely at reforms that have been tried in other states, including changes in benefit calculations, such as capping the salary or rolling back the modifier.
Corbett says a proposal will be part of his budget plan for this year, although he admits his office is down to about two weeks to figure out the specifics. His only hint to the editors’ group was that adjustments to the multiplier could make an important difference.
BOTH OFFICIALS stressed changes have to take into consideration what people have already earned and what they are counting on. Current retirees have to feel secure their pensions won’t be affected, they said.
However, what they don’t say is how they plan to convince state employees and the powerful state teachers union that change has to happen.
“The taxpayers get it,” Zogby said. The people of Pennsylvania know this is a crisis. But for pension reform to work, the state needs to get the unions and groups representing public employees on board, as well as the lawmakers.
One way to start might be to enlist the ideas and help of those groups in writing the reforms. Get buy-in first and soften the sell.
Corbett has made his emphasis on pension reform clear to the public. It’s time now to get down to brass tacks and figure out a plan that not only will work but that will also have the needed support.
Time is of the essence. That tapeworm gets hungrier by the day.
— Journal Register News Service
Hope@ZeroKelvin says:
Dude, you are living in the WRONG state.
Here in Texas I pay $7,000 for almost 500 acres of property, including my home and I pay ZERO state income taxes.
Thanks to our state actually embracing fossil fuels, we have a multi-billion dollar surplus.
As to these pensions, well, these folks are gonna have a real bad day real soon. Wonder if their reaction will be better or worse than that of the SNAP folks when the EBT cards go to zero.
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14th January 2013 at 9:36 am
AWD says:
You’re screwed. The only good thing is your governor is actually admitting gold plated union government employee pensions are a “tapeworm”. I call ‘em cancer, they’re killing states all over.
Here in the socialist state of Illinois, they’re getting ready to ask for a Federal bailout for pensions. My property taxes are unbelievable. Yet, the keep raising them every year, and there doesn’t seem to be a thing I can do about it.
The criminals in government can just keep raising taxes forever. Until people join together to do something about it (beside voting, which is useless), they will continue to screw us productive people in the ass without any K-Y.
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14th January 2013 at 9:49 am
Eddie says:
Hmmmm. Just to contrast that, I pay about 10K on my house alone, and an additional 12K on other real estate I own in Texas…but only about 40 acres is rural land, the rest is either in the burbs or at the lake. So, while Texas has some tax advantages, it isn’t all roses in that regard.
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14th January 2013 at 9:57 am
Administrator says:
My $4,000 bill is for my .25 acre ranch.
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14th January 2013 at 10:11 am
sangell says:
I’ve read here that, as a result of a Supreme Court decision, Social Securty benefits of the people are not guaranteed at all. That any future Congress can reduce or even deny them. OTOH public employee groups in California and perhaps other states claim their pension benefits are Constitutionally guaranteed and even where cities go bankrupt, public employee pension lawyers threaten to tie the city up in court if any cuts are made to promised pension benefits thus leaving those towns elected official and citizens efforts to reorganize their community finances paralyzed or having no choice but to cut even further existing services such as police and fire.
Obviously businesses and people will be loath to reside in a community where all the tax revenue is used, not to fund the current needs of the city or state, but to fund ridiculously generous pension benefits awarded years ago by local politicians eager to get the support of public employee unions. This is going to come to ahead very soon when a major city like Chicago or Los Angeles simply runs out of revenue to either fund its pensions or shut down city government.
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14th January 2013 at 10:17 am
BUCKHED says:
Well…why don’t the states mint 1 million dollar gold coins…pass them out to pensioners and say…PAID IN FULL !
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14th January 2013 at 11:31 am
gubmint cheese says:
4k,?
Try 10k in south central PA. home on 1.5A lot. 8k is skool tax. It’s for the children you know.
Getting a position in our skool district is like playing the lottery. hundreds of applications for each open position (usually a retiring teechur or administrator- no one quits). If you are lucky enough to get on board its a good gravy train.
On the bright side the crushing real estate tax burden and high fuel prices have slowed the migration of progressives from the Baltimore Washington Federal zone.
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14th January 2013 at 11:32 am
Kill Bill says:
And when the unions, allowed to fester by corrupt politicians, finally bankrupt the state the creditors, stock jobbers and paper traders will swoop in and create austerity measures that will wreck the union but not lower your taxes whatsoever. The come the raised parking rates, rents for formerly public buildings, increased airport and sanitation fees, jail costs.
Congrats Pennsylvania, you will be the first state or paupers ruled by your new lords.
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14th January 2013 at 12:05 pm
Ron says:
Wow you must have lots of lube. Most folks i meet here pay anywhere from 500.00 to 2000.00 for taxs.
It depends on its worth. Places with no state tax nail you with property taxs.
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14th January 2013 at 2:59 pm
Llpoh says:
Damn, my get of Dodge plan is really looking better and better.
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14th January 2013 at 3:56 pm
IndenturedServant says:
I currently pay a bit less than $1200 on large corner lot and my house is 1000sq.ft.
@admin, you get hosed twice because of the vacation home, no?
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14th January 2013 at 4:00 pm
IndenturedServant says:
@admin,
Maybe you can turn it into section 8 housing and “rent” it to one of your children?
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14th January 2013 at 4:02 pm
Administrator says:
IS
Don’t get me started on the condo. My real estate taxes for a 1,200 sq ft condo are $5,500.
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14th January 2013 at 4:09 pm
Anonymous says:
“The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents — #43 added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back — $30,000 for every man, woman and child. That’s irresponsible. It’s unpatriotic.“ Hacky Sack Barack ,Community Organizer Turned Chief Post Turtle
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14th January 2013 at 4:17 pm
AWD says:
I wonder how much your Section 8 neighbors have to pay?
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14th January 2013 at 4:20 pm
Muck About says:
@AWD: I wonder how much grease you’d get by boiling them all down…. Probably enough to use for cooking oil for two years, just from four obese worthless bodies….
Of course, you’d have to purify it – reverse osmosis works well – and with “flex-fuel” the coming thing, you could probably burn the oil to motor around to locate other donors..
Damn, I get tired of your fat pictures but I give you all the credit in the world for staying power!
MA
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14th January 2013 at 5:35 pm
llpoh says:
Admin pays $10k in property tax. Then there is fed tax (I suspect he isn’t in the group that doesn’t have to cough up fed tax). Then he pays 3.07 percent state income tax, which will be good for a few thousand more into the pockets of the government drones. SS tax will be sucking up near enough to five digits, I imagine. Plus sales tax of around 6-8%. So I am guessing, not allowing for deductions, Admin’s tax situation is something like this:
property tax $10k
SS tax $7k
Fed Tax $35k
State tax $5k
Sales tax $5k
Misc taxes not knowable $5k
Tax on TBP earnings $0.28
Plus say 35% of whatever Avalon earns.
For a tax bill of perhaps $67,000.28 plus Avalon’s taxes.
What a fucking, stinking, slimy, maggot ridden pile of shit that is. How the fuck is that fair, when HALF the fucking population pays no fed tax at all, Admin spent his life educating himself, working at unsavory jobs for unsavory companies (IKEA) in order to build experience and to feed his family, and taking care of his family every single day of his life.
How is that fucking fair? How is that a fair share – that hard-working, responsible people making an upper-middle class income (perhaps he is doing a lot better than that, but I presume the university does not pay like Goldman Sachs) , has to pay $67,000.28 per year in tax, and perhaps shitloads more depending on Avalons situation, investments, etc., when so many are doing NOTHING?
Pissed off? Why the fuck would he be pissed off? What surprises me is that the middle-class and upper-middle class and the semi-affluent are not marching on the centers of government en masse.
As I have said, I am putting together an exit strategy where I will minimize tax by a number of legal means, instead of paying massive tax bills each year. Enough is enough.
$67,000 dollars a year in tax because a person has done the right thing, and it is redistributed to the government lazy assholes and the fat, good for nothing free shit army.
Yes, why would the Admin be pissed off. I cannot understand why he would be irked at all.
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14th January 2013 at 6:08 pm
llpoh says:
As a point of note – I have no fucking idea what Admin has or what he makes, and I am not attempting to disclose anything. I am simply guessing – a poorly educated guess perhaps – based on him being a senior manager at a prestigious university. For all I know he has more money than Rockefeller, due to his undoubtably frugal ways and wise investing. Which would only add to his tax bill. Hope he likes the Obamacare levy on his investment income.
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14th January 2013 at 6:14 pm
Stucky says:
Admin was responsible, in part, for the construction of new Ikea’s.
As punishment, his high taxes are just the first circle of hell. He has six more circles to complete before atonement is made.
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14th January 2013 at 6:31 pm
AWD says:
Muckster
That was a picture of Admin’s section 8 neighbors at the beach.
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14th January 2013 at 6:57 pm
Administrator says:
llpoh
You forgot the City of Phila wage tax of 3.5%. I pay them thousands per year for the privelage of driving the 30 blocks of squalor and being stuck in traffic on the schuykill.
My Federal income tax is significantly lower than $35k. You need to make a lot more than I make to pay that chunk of change, plus I have three tax deducations at home, mortgage interest, RE taxes and a condo partnership that generates a big loss every year.
I even managed to make 30% less revenue from TBP in 2012 than I did in 2011, while almost doubling my visitor counts. Great tax planning on my part.
I do it all for the poor souls on SSDI. It brings a tear to my eye every time I see a fat ass on a rascal knowing I’m paying for their ability to cruise down to KFC and whip out their EBT card.
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14th January 2013 at 7:14 pm
llpoh says:
Admin – I will duly reduce the $0.28 tax by by 30% down to $0.20 tax on TBP income.
But my point remains – you pay tens of thousands on your income, for….what? To be involved in foreign wars? To support lazy ass govt employees? For Snap cards, and to fund SS receipients of all kinds? I bet if you got to keep those payments you would be able to invest them, and would never need to draw on SS yourself! Now isn’t that a novel idea! People actually paying for their own retirement! No, couldn’t allow that. That would be making the people FREE.
One thing I am happy to pay for is education. But the averqage cost of sending a kid to school is what, $10k? $10k times 25 kids = $250k per classroom of kids. That is criminal. I bet a private co could do it for under $100k. It is all total bullshit.
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14th January 2013 at 7:29 pm
Administrator says:
llpoh
I do pay my fair share of taxes and I lived my life so that I wouldn’t need Social Security in my old age. I’ve lived beneath my means when I made $25,000 per year and continue to do so today. It’s amazing what you can save if you never spend more than you make.
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14th January 2013 at 7:49 pm
llpoh says:
Admin – I knew that already. It was rhetorical to make the point that folks could/should be saving fr their own retirement, and if they were not taxed by the govt for retirement costs, they could use that money to build up their retirement savings themselves. I expect most folks would blow it, but folks like you and me would re-double our savings plans to make our lives even better in the future.
I have spent significantly less than I have earned each year for about thirty years now. For the first ten years or so, I struggled mightily – house payments, kids on the way, etc. Ibn the second decade, things got better – I made a bit more, my investments began to grow, home equity began to increase, mortgage paid off etc., and became totally debt free, and moved to a better house on a few acres. Then in the last ten years I have been able to totally not worry about my expenditures – I spend like a drunken sailor at times. But I save well over half of my income. And it all was possible because of decisions made 30 years ago, and the compounding effect that has occurred.
And then I see people I know who are making relatively more than I was 30 years ago at the same age I was – they spend it all and then some – their houses are too big, their cars are too flashy and too many, they eat out (my wife and I ate out about twice those first ten years.), they buy all of the igadgets, etc. And they have nothing – their house equity is non-existent, as there is no appreciation of the asset and they are not paying off what they owe, they are investing nothing, and they carry debt.
I admire folks like yourself to no end. And I truly appreciate that it is only possible when the husband/wife share common goals and dreams and values – Avalon is to be truly commended for her part in your success. I also find that people that behave prudently generally make a positive mark on their children, by providing positive examples and teaching the value of delayed gratification and work ethic.
I hope that it is possible for those such as yourself to reap the rewards that should be accruing for your efforts, and that the government does not strip it all away one way or another.
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14th January 2013 at 8:21 pm
Administrator says:
llpoh
We have a mutual admiration society because I admire your courage and drive in creating a business, growing it, and providing good jobs for 100 Americans. I don’t have the guts to take that kind of chance. Small business owners are the backbone of this country and Obama and his minions are doing everything in their power to destroy you. I think it is disgraceful. I don’t blame you for exiting stage right. When you get set up in your new locale we’ll have to meet up and go fishing.
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14th January 2013 at 9:03 pm
AWD says:
“We have a mutual admiration society”
Lipoh and admin at Wildwood beach
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14th January 2013 at 9:32 pm
Llpoh says:
AWD – now you did it. I always knew you were into gay porn.
BTW – I think pretty highly of doctors, too. Sounds like a great job to those that do not have to do it. It probably has lots of rewarding moments, in the midst of endless hours of shit. Glad such as you and Hope do it.
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14th January 2013 at 9:42 pm
AWD says:
Sorry, I couldn’t resist.
You and admin’s sage financial advice and example have been helpful. Doctors aren’t the best at financial planning or living below their means. I can’t help but get the feeling that before long it’s not going to matter much how much cash you have in the bank, it’s going to become worthless. All that’s going to matter is how much gold and tangible assets (like ammo) you have.
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14th January 2013 at 9:52 pm
Bruce says:
Anyone who taxes income or property is an enemy. Anyone who supports tax on income and property is the enemies minion.
50% are dependent on enemy to collect income and property tax.
45% will support the enemy because they are reliant on the enemy and brain trained.
4.9% hate the enemy but can do anything about it.
.1% make big profits off the income and property tax system of theft because they are the enemy.
100% are fucked when the SHTF.
For those who want to be free there few allies in the world. As much as I admire the Founding Fathers and consider them to have been one of the most enlightened assemblies of men in all of history I still have to ask, what were they thinking? Some of them must have known that the best form of centralized government is one that does not exist.
We are doomed.
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14th January 2013 at 12:28 am
DSNY Family » Public Worker Pensions Not Bankrupting Gov’t says:
[...] Only $9,000 Per Household [...]
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14th January 2013 at 2:51 am
Pensioner Problems | Moningtonomics says:
[...] Only $9,000 Per Household (theburningplatform.com) Share this:TwitterFacebookLike this:LikeBe the first to like this. This entry was posted in Political Economy, Public Choice, Public Finance. Bookmark the permalink. [...]
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14th January 2013 at 8:54 pm