If even the wealthiest big city in the U.S. is feeling the pinch from public pensions, you know the problem has become endemic.
According to Bloomberg:
The city, where the unemployment rate is just 3.2 percent and the typical home sells for more than $1 million, is facing a budget shortfall that will reach $848 million in five years. Increases in pension payments and other payroll costs are driving the gap, according to a five-year financial plan, despite a measure voters approved in 2011 that aimed to cut employee-retirement bills.
Admittedly, it’s hard to feel sorry for San Francisco, which an official in the article describes as a “service-rich government.” It’s so service-rich that last year 97 percent of pothole repair requests were addressed in 72 hours.
But if even Baghdad by the Bay is feeling the pinch, other cities and states are in a vice grip:
State and local governments have about $2 trillion less than what they need to cover retirement benefits because of investment losses, inadequate contributions and perks granted in boom times. And in California, over the next few years, there will be “a rash of local agencies unable to meet their pension obligations,” said Dane Hutchings, a lobbyist for the League of California Cities.