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Pull up a Pew

Via Heritage: The Pew Center on the States has published a report entitled "The Widening Gap: The Great Recession’s Impact on State Pension and Retiree Health Care Costs." The paper is pretty brief and you're certainly capable of reading it for yourself, but here's a couple of points with respect to NYS specifically:

NYS looks great, right? State pensions101% funded?  Well, as we've mentioned in an earlier post public employee union (PEU) pensions are guaranteed by the state constitution, so NYS isn't quite as fiscally virtuous as it might appear—just constitutionally enabled (and disposed) to pick taxpayers' pockets for the purpose of pensions.

It's this map that's the kicker:

NYS doesn't look quite so good in that one.

And as the Washington Post reports

...Pew officials said the growing shortfall was driven by inadequate state contributions, an aging population and market losses that accompanied the recession.

Although investment markets have recovered substantially since the period covered by the report, its authors warn that states still face an increasing burden from retiree costs that are beginning to crowd out critical services.

“In many states, the bill for public-sector retirement benefits already threatens strained budgets and is competing for resources with other critical needs, including education, infrastructure and health care,” said Susan Urahn, managing director of the Pew Center on the States.

There's that dastardly opportunity cost—in the short run, you don't get to have things all ways.  Funny how that works.

[....] Even as they face increasing liabilities, the report said, many states are not making pension contributions in amounts recommended by their actuaries as they juggle retiree and other costs against a backdrop of weak revenue.

Might New Yorkers go Galt?  A related note here from Crain's New York Business: with respect to the federal debt, "It is painfully inevitable that any effort to attack the debt problem will be disproportionately paid for by New Yorkers. The city's relative wealth means that higher taxes will come in large part from people who live here..." The author is referring to NYC; but as we know, what goes on there will affect the rest of the state whether we upstaters like it or not. 

In making its calculations, Pew used the states’ assumptions for what their pension funds would earn in annual investment returns, typically 8 percent — a figure that states have mostly met in recent decades but that some analysts think is now overly optimistic.

Another Captain Renault moment....and while the Post article opened with "The state funds that pay pension and health-care benefits to retired teachers, corrections officers and millions of other public workers faced a cumulative shortfall of at least $1.26 trillion at the end of fiscal 2009, according to a new report," it later states that

If states calculated their investment returns the same way that private firms are required to for their pensions, their obligations would balloon to $1.8 trillion, the report said. If states pegged their returns to 30-year Treasury bonds, an even more conservative standard, the liability would be $2.4 trillion...

Read the rest.

Who's going to pay for all this?

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