You all know that I would rather live in Texas, a Free State. One reason is that California is bankrupt and not smart enough to admit it. We are $1.5 trillion in debt, at the State level. Californians added over $500 billion to taxes and bonds on November 8th, then add the hundreds of billions of local government and school district debt, the $991 billion under funded CalPERS liability and the close to $200 billion CalSTRS problems. No way to pay it off—in fact CalPERS already announced major contribution increases starting July 1, 2017. Now, even Dallas, Texas is facing economic ruin, bankruptcy, due to the pension problem.
“What is happening in Dallas is an extreme example of what’s happening in many other places around the country. Elected officials promised workers solid pensions years ago, on the basis of wishful thinking rather than realistic expectations. Dallas’s troubles have become more urgent because its plan rules let some retirees take big withdrawals.
Now, the Dallas Police and Fire Pension System has asked the city for a one-time infusion of $1.1 billion, an amount roughly equal to Dallas’s entire general fund budget but not even close to what the pension fund needs to be fully funded.”
Will they reform the system or act like California and ignore it—until there is no more money? I think Texans will not allow that to happen.
Economic Policy Journal, 11/21/16
The New York Times reports:
Picture the next major American city to go bankrupt. What springs to mind? Probably not the swagger and sprawl of Dallas.
But there was Dallas’s mayor, Michael S. Rawlings, testifying this month to a state oversight board that his city appeared to be “walking into the fan blades” of municipal bankruptcy.
“It is horribly ironic,” he said.
Indeed. Dallas has the fastest economic growth of the nation’s 13 largest cities. Its streets hum with supersize cars and its skyline bristles with cranes. Its mayor is a former chief executive of Pizza Hut. Hundreds of multinational corporations have chosen Dallas for their headquarters, most recently Jacobs Engineering, which is moving to low-tax Texas from pricey Pasadena, Calif.
But under its glittering surface, Dallas has a problem that could bring it to its knees, and that could be an early test of America’s postelection commitment to safe streets and tax relief: The city’s pension fund for its police officers and firefighters is near collapse and seeking an immense bailout.
Over six recent weeks, panicked Dallas retirees have pulled $220 million out of the fund. What set off the run was a recommendation in July that the retirees no longer be allowed to take out big blocks of money. Even before that, though, there were reports that the fund’s investments — some placed in highly risky and speculative ventures — were worth less than previously stated.
What is happening in Dallas is an extreme example of what’s happening in many other places around the country. Elected officials promised workers solid pensions years ago, on the basis of wishful thinking rather than realistic expectations. Dallas’s troubles have become more urgent because its plan rules let some retirees take big withdrawals.
Now, the Dallas Police and Fire Pension System has asked the city for a one-time infusion of $1.1 billion, an amount roughly equal to Dallas’s entire general fund budget but not even close to what the pension fund needs to be fully funded.
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