Government employees, think about this…
Bankruptcy. It is not exactly a pleasant thought, but it could be in your future. Unthinkable? Read on…
Central Falls, Rhode Island is a small town about a 15 minute drive north of Providence, Rhode Island. It has 19,000 residents. But, it has a problem…with an annual budget of $17 million, it has $80 million in unfunded pensions, $21 million in outstanding debt, and $5 million of projected deficits for each of the next five years.
The town tried to get concessions from those on pensions, but, the retired employees refused. So, on Monday, Central Falls filed for bankruptcy.
Now, Central Falls has asked the Bankruptcy Court to “reject” (a fancy legal term that means void the contract in its entirety) the union collective bargaining agreement. Until the court rules on that (parenthetically, the court will reject the contract), Central Falls will pay its retirees what the town had last offered. After that rejection, its anyone’s guess what retirees will get, if they get anything.
And, Central Falls is not alone.
Alabama’s Jefferson County is currently working to ward off the largest municipal bankruptcy in U.S. history stemming from its $3.2 billion sewer bond crisis. The Pennsylvania state capital of Harrisburg, which has about $300 million incinerator debt, is also considering bankruptcy.
There are several lessons here, but let me focus on just one…”tax the rich”.
I don’t know how many “rich” live in Central Falls. But, let’s assume all 19,000 residents are “rich”. Each resident’s taxes will need to increase by $4200 just to cover the unfunded pension liabilities. Each resident’s taxes will need to increase by $1100 just to cover the town’s outstanding debt. Each resident’s taxes will need to increase by $260 per year for the next 5 years just to cover the projected annual deficits. Of course, some of those residents are only 4 years old, which makes matters even worse.
Using those numbers, it’s clear that Central Falls doesn’t have a revenue problem, it has a spending problem.
Does any of this sound familiar?
19 Comments
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The site is not broken.
Just a microcosm of the country’s problem.
I was a government (state) employee and I receive a pension. However it is not an administrator’s pension or a retired college professors pension.?
I watched the waste for years and never felt comfortable with it. I tried to bring it up?at times but if you?don’t play the game as a state employee, you don’t fit in. I resent that I was forced to pay union dues all those years.?I would have preferred not to be associated with a union.??I believe if you take a job and you intend to do it to the best of your ablity, you don’t need some greedy union taking your money every month for nothing. I’d love to have all that money back.
The union is there to?fight?to save the jobs of all those who?try to get away with not doing what they should. I saw people keep their jobs that should have been fired on the spot.?
There are so many positions?that are totally unnecessary in every state agency. Especially at the tip. Directors, assistant directors, assistant to the assistant and on and on and on, until it gets down to the handful of people who actually have a job to do.?All those layers of management are the pensions that are bleeding?the states dry.
The budgets?are the most ridiculous things are I have ever seen. No one could run…
SOS, you need to stop muddying the waters with all your facts and real math. Someone might call you a terrorist or accuse you of wanting to?hold a gun to the?heads of?public employees and their families.
When you think seriously about our country’s financial situation and it’s poor economical outlook, a bankruptcy of some kind is probably the only way we’ll be able to survive. ?It’s too bad our elected “officials” don’t have the nuts to scrap the wasteful spending loop that they’ve grown so fond of feeding. ?Do you think any of these people manage their personal affairs in the same manner they’ve been handling the affairs of state? ?I think not! ?You see it’s so much easier to spend recklessly when it’s not your own money!
I can’t believe this problem in Central Falls got so bad. Who would ever move in to this town?
My husband’s co. had a fully funded pension of $600,000 for all his employees over the years. During it’s heydey, there were 50 employees.? How many employees does it take to run a 19,000 resident town?
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Wouldn’t it be nice if the unions, that funnel all those millions of dollars to the likes of ?bama and the Democrats, would consider putting some of that money to good use bolstering their member’s retirement fund?
Dims, that’s we are here?for!
Central Falls need Malloy.? He is a great statesman and knows how to fix an entire state, so can you imagine the good he’d do for a town of 19,000 residents whose public employees have underfunded pensions??
Aren’t there severe penalties for companies who consistently underfund their pension plans (in the private sector, read: the real world)?? If I remember correctly, our employees’ pension plans had_to_be_100%_funded at some point during a fiscal year.? Of course, that was in the good ol’ days when a privately owned company could offer their employees a 100% funded pension plan.? You never promise what you cannot fund.? Simple as that.? And in the private sector, should things change for the worse financially, you can reduce benefits/contributions by simply putting out a memo.? None of this collective bargaining b.s.? Public sector union employees are hostage takers…they’re terrorists…they wanna push gramma & grampa off a cliff.
Wrong post, or did I make my point?? 🙂
Can you pull harder AND eat your peas at the same time?
Everything is simple if you do not live in Central Falls, even the “math”.
Clearly, the unions use complex math: imaginary numbers.
I’ll be glad when Republican policies are finally able to kill off these greedy old government retirees so we’ll have more money to spend on wars and other things we love.
Note to crystal: that was tongue in cheek!? 😉
Do you guys let your children read what you write?
According to the US Census Bureau, the US median income in 2006 was $48,201.00.
http://askville.amazon.com/average-yearly-household-income-2008/AnswerViewer.do?requestId=9950248
What if the state and federal workers were paid no more than the average American – those that they SERVE.??I bet they would streamline ?Gov’t regs and?set up excellent?conditions for the prosperity of the average American – because it would be in THEIR own benefit to do so.??
Americans would win.?
America would win.?
And we lead the world with a positive example.?
If you tell a big enough lie dream enough times, people start to believe it.
It seems that private business and public governments are alot like schools (private and public).? The public schools/ governments have more trouble makers.? They cause grief for everyone else and are tough to bring in line or get rid of.?
My apologies.? I malfunctioned a function.??The word lie was to have a strikethrough line.
If you loan your car to someone and?get it back with an empty tank, do you let them borrow it again?
If you trust?someone?to invest your $100 and they squander it and hand?you a? bill for $120, do you give them more of your money?
If you pay your taxes and your elected officials mismanage……..
Any word as to whether Central Falls, Harrisburg or Jefferson?County was run by Dems or Repubs?
In any case, it is blatantly apparent that politicians and lawyers?chose their carreer paths because math was too hard.