Local and state governments have a looming pension debt crisis gathering, the likes of which make Puerto Rico’s financial distress seem a minor prelude, according to a Forbes.com commentary. Illinois offers a textbook case of the coming pension fund meltdown with its years-long slow motion fiscal train wreck. On Monday, the Illinois House overrode Gov. Bruce Rauner’s veto of the Chicago police and fire pension bill at the urging of Chicago Mayor Rahm Emanuel. With the Senate’s override vote earlier, the bill becomes law. Without the bill, Mayor Emanuel warned of a “Rauner Tax” — a $300 million property tax hike made necessary by the fiscally-strapped city being unable to borrow $843 million from its pension fund at 7.75 percent to meet current obligations. Gov. Rauner said the veto override would put “an additional $18.6 billion on the backs of taxpayers” warning about “governments (that) fail to promptly fund pension obligations” and kick the can down the road instead of enacting reforms to “grow our economy, create jobs and enable us live up to the promises we’ve made to police and firefighters.” Unfortunately, Illinois is far from alone in this fiscal quagmire, according to the commentary. Top honors for unfunded public pension debt belongs to The Last Frontier State, Alaska, with per capita pension debt, assuming market rate returns, of $38,251, according to the Stanford Institute for Economic Policy Research at Stanford University. Illinois comes in at second, with $28,880 in unfunded pension liabilities per person. Connecticut, California, Massachusetts and New Jersey round out the top six, each having more debt per capita owed to just their pension systems than Puerto Rico owes on its bond debt. Read the full commentary.
Experts on the April episode of “Eye on Bankruptcy” discussed looming financial crisis in private and public pensions. Click here to watch.
