As the General Assembly convenes next month with the pressing objective of balancing the budget, one of the things our parliamentarians should be thinking about is the commonwealth’s $3.6 billion unfunded liability for its employees’ post-retirement benefits. That figure comes from a November report published by the U.S. Government Accountability Office.
Outgoing Gov. Tim Kaine has proposed increasing the contributions of teachers and state employees into the pension system. (See my previous coverage, “On a Slippery Slope: The State Pension Fund.”) With all the other painful decisions that need to be made, will our new governor and legislators have the stomach to enact that reform, or even some other? I don’t know. But we can consider their action or non-action as a good bell-weather for their determination to maintain the state’s AAA bond rating.
It may come as some consolation to know that many other states have it worse. Our neighbor and economic competitor to the south, North Carolina, has an unfunded liability of $28.7 billion — eight times larger. Our friends to the north, Maryland, have a $14.7 billion liability.
Or, if you want to consider someone who’s really in a world of hurt, take a look at New Jersey ($50.6 billion liability), New York ($50.8 billion) or California ($62 billion). The powerful public employee unions are pushing those states straight toward bankruptcy. It will be interesting to see which state defaults first, and how many years off that default is. Anyone want to make odds?
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