A Looming Pension Disaster
Mayor de Blasio says that New York City’s finances, flush with tax revenues, are rosy. He makes no mention of the city’s pension obligations, a fiscal balloon waiting to pop. All five of the city’s public-pension funds are significantly underfunded, and the stress they put on New York’s fiscal future is growing. Without reform, disaster is inevitable.
The Facts You Need to Know
Reversal of Fortune: In the 1970s, public-pension funds were flush enough to buy municipal bonds from New York City, which needed the revenue to stay financially afloat; today, the city diverts operating revenue to help prop up the pension funds. Read more.
Unrealistic: Forecasts that the pension funds will pay off their debt in the next 15 years are based on continuous annual investment returns of 7%–a highly unrealistic target. Read more.
Guaranteed: New York is one of few states that constitutionally guarantees past and future retiree benefits, making it difficult to reform the system and alleviate the crisis. Read more.
“The city pension funds are tens of billions in the hole, and taxpayers will have to pump a lot more money into them. If you think the pension tab is high, just wait a few years.”
The Past is Present
“Don’t believe the public-sector unions when they say that worker pensions are modest.”
FOURTH OF JULY
Happy Independence Day!
From all of us at The Beat, have a wonderful holiday.
And in other news...
“It had been nearly 16 years since this part of Lower Manhattan had seen a farmers’ market like this. Bunches of dried and fresh lavender. Vodka made from locally grown purple potatoes. Hand-spun maple syrup cotton candy.”