There are three major threats threatening both state and local governments across the country. Bond defaults, health care costs and pension liabilities. Any one of them can bring down a state or local government on its own, yet we have many that face multiple threats. Now, a state may not be able to go bankrupt under current law, but they can go into receivership which will trigger a wave of problems not unlike a bankruptcy.

It already happened in Prichard, AL, as they couldn’t meet their financial obligations any longer and just quit mailing pension checks. They canot legally do this so we know where this is going. Prichard is just a small taste of what is to come. Many of our nations major cities and then of course the states also face the same fate. Business Insider magazine put together a list of those who are on the hot seat and most likely to go down next. I would think they are being optimistic in their projections. As the unemployment rate stays in the stratosphere and our federal government continues its policies which are detrimental to all of us, the economic pressures are likely to increase over the next decade and will speed up the doomsday dates for the cities and states. Here is the list.

The NEXT 10 City Pensions That Will Run Out Of Money

Gus Lubin | Dec. 27, 2010, 10:04 AM | 6,872 | 5

  •  
    x

    Email Article

    <!–div> </div–>

  • Email Sent!

    You have successfully emailed the post.

     

  • //
  • inShare
  • //

  • //
  • chart

    The red line shows the government’s estimate. The purple line is the actual cost.

    The first total municipal pension default happened last week: Prichard, Ala. ran out of money stopped mailing pension checks. 

    Hundreds of cities could be right behind. Projections by Robert Novy-Marx and Joshua Rauh [PDF] show the average city has $15,000 per household in unfunded pension liabilities. These massive liabilities are ignored by common government accounting (see chart).

    Insolvency means benefit cuts or borrowing from the already-near-broke states.

    Many of the 77 cities surveyed by Novy-Marx and Rauh are facing insolvency within the next decade. Other small cities like Prichard could go even sooner.

    #10 Fort Worth

    Mayor Mike Moncrief

    Image: ap

    Unfunded liability: $2 billion 

    Unfunded liability per household: $7,212

    Solvency horizon: 2023

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    #9 Detroit

    Mayor David Bing

    Unfunded liability: $6.4 billion 

    Unfunded liability per household: $18,643

    Solvency horizon: 2023

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    #8 Baltimore

    Mayor Stephanie Rawlings-Blake

    Unfunded liability: $3.7 billion 

    Unfunded liability per household: $15,420

    Solvency horizon: 2022

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    #7 New York City

    Mayor Michael Bloomberg

    Unfunded liability: $122.2 billion 

    Unfunded liability per household: $38,886

    Solvency horizon: 2021

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    #6 Jacksonville

    Mayor John Peyton

    Image: ap

    Unfunded liability: $4 billion 

    Unfunded liability per household: $12,994

    Solvency horizon: 2020

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    #5 St. Paul

    Mayor Chris Coleman

    Image: ap

    Unfunded liability: $1.4 billion 

    Unfunded liability per household: $13,686

    Solvency horizon: 2020

    Note: These numbers refer to St. Paul’s largest pension, a teachers fund.

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    #4 Cincinnati

    Mayor Mark Mallory

    Image: ap

    Unfunded liability: $2 billion 

    Unfunded liability per household: $15,681

    Solvency horizon: 2020

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    #3 Boston

    Mayor Thomas Menino

    Image: ap

    Unfunded liability: $7.5 billion 

    Unfunded liability per household: $30,901

    Solvency horizon: 2019

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    #2 Chicago

    Mayor Richard Daley

    Image: ap

    Unfunded liability: $44.8 billion 

    Unfunded liability per household: $41,966

    Solvency horizon: 2019

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    #1 Philadelphia

    Unfunded liability: $9 billion 

    Unfunded liability per household: $16,690

    Solvency horizon: 2015

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    BONUS: These cities are also facing pension apocalypse

    2024: Seattle 

    2026: Dallas

    2027: Houston, Los Angeles, Miami, San Jose

    2028: Memphis, Milwaukee

    2031: Tacoma

    2032: San Francisco

    Source: Robert Novy-Marx and Joshua Rauh [PDF]

    Just like cities, state pensions are running out of money.

    Image: AP

    And Now, Here’s The First 11 State Pension Funds That Will Run Out Of Money >

    Read more: http://www.businessinsider.com/first-city-pensions-insolvent-2010-12?slop=1#slideshow-start#ixzz19KR5qZiH

    Advertisements

    One thought on “Pension tsunami threat growing

    Comments are now closed.