Step Right Up and Play the Pension Shell Game!
Here is a story that could only come out of New York: there is a plan afoot to allow the state and its municipalities to borrow money from the pension fund in order to make pension payments into the pension fund and then repay the money back, at higher interest, beginning in 2013. In all the state would borrow somewhere in the range of up to $2 billion and local governments could take on $4 billion or so. According to the most recent Census of governments New York has 57 counties and over 1,500 municipalities.
The symptoms sound eerily familiar to what is going on in Pennsylvania: enhanced benefit packages and a declining stock market have caught up with each other to weaken the underpinnings of the pension system. Rate spikes are projected for the Commonwealth’s two plans for state workers and school teachers in the next few years as a result of deals brokered in the early part of the decade, and municipalities have been granted tax increases (Philly and Pittsburgh) and some time to get a breather from retirement contributions.
But no one has yet suggested dipping into the pension trough to take care of the obligations.