States confront exploding pension costs

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The Hill:

State budget officials already worried about tight financial times face a new pressure in rapidly rising pension liabilities, according to a new report to be released Friday.

 

The report, from Moody’s Investors Service, shows states are already liable for an estimated $1.25 trillion in pension costs for current employees and retirees.

 

It says those costs are likely to mount with inflation.

The rising costs will contribute to budget crises that will force states to rethink spending priorities.

 

Legislators and governors in many states will have to decide whether to face some budget pain now, or leave it to their successors to take on significantly more pain in the future.

 

“This is something we have to get addressed,” said Glenn Hegar, the Texas State Comptroller. “These are the things we need to be looking [at going] forward into the future.”

 

Half the states are paying less than what is required to meet their annual liabilities, Moody’s reports. That will force them to pay more in future fiscal years to meet their long-term liabilities.

 

Kentucky, New Jersey and Illinois all among the states where the crisis is the most severe. All face large shortfalls between contributions to their pension funds and growing liabilities as more workers owed pensions retire.