U.S. state and local governments will need to raise taxes by $1,398 per household every year for the next 30 years if they are to fully fund their pension systems, a study released on Wednesday said.
The study, co-authored by Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester, both of whom are finance professors, argues that states will have to cut services or raise taxes to make up funding gaps if promises made to municipal employees are to be honored.
Pension funding in U.S. cities and states has deteriorated in the wake of the 2007-2009 economic recession as investment earnings dropped, and some states, such as New Jersey and Illinois, skipped or reduced required payments.
This is just to fund current retirees. How much more to cover current and future employees? And why should we all be on the hook for states like Illinois, where liberals have squandered money and spent what they don’t have for generations? Aha:
New Jersey will need to increase its revenue by the largest margin, requiring $2,475 more from each household per year, according to the study.
The contribution requirements may be higher for states that already have a significant amount of debt on their books and “cannot tap municipal bond markets as easily for large contributions,” the report said.
Hello, California. This debt debacle won’t end any time soon, especially with such a dismal employment market or the current administration in office.