Government employee pensions could bankrupt Rhode Island
October 30, 2011 Leave a comment
So, do they continue to fund the enormous pension burden of the retired government employees or do they pay for schools and other social services? This is an interesting story about how the state treasurer, Gina Raimondo, is trying to work out a solution.
“After decades of drift, denial and inaction, Rhode Island’s $14.8 billion pension system is in crisis. Ten cents of every state tax dollar now goes to retired public workers. … Until this year, Rhode Island calculated its pension numbers by assuming that its various funds would post an average annual return on theirof 8.25 percent; the real number for the last decade is about 2.4 percent.”
“For many Americans, the Ocean State conjures images of Newport mansions and Narragansett chic. The overall reality is more prosaic. Rhode Island today is a place where the roads and bridges rank among the worst in the nation and where jobs are particularly hard to find. Unemployment rose faster during the 2008-9than in any other state. The official jobless rate is now 10.6 percent, versus the national average of 9.1 percent.”
“Rhode Island is so small that there is little margin for error. Leaving the state, to escape its taxes, is almost as easy as moving to the other side of town. Efforts to balance the state budget by shrinking the public work force have left Rhode Island with a problem like the one that plagues General Motors: the state has more public-sector retirees than public-sector workers.”