Sales-tax hike’s roots lie in pension increases

[pjwal]

It’s an uncertainty that might force unions and retirement systems to take a deal without forcing a judge to rule on the issue.
…
In short, bankruptcy levels the playing field. Everyone owed money must jockey for position. It’s more likely in bankruptcy, Shea said, for a party to settle than to bet on victory particularly when so much money is at stake.
…
A bankruptcy might not wipe pension obligations away, but it could make the debt smaller.

Everyone always takes things out of context. No one is talking about completely wiping pension obligations off the books. But somehow, through bankruptcy or otherwise, the obligation needs to be reduced. I vote for bankruptcy.

[CA renter]

Some history on why we’re in this mess (state and local):

http://www.caltax.org/member/digest/Apr2003/4.2003.Taylor-PensionCrisisSwampsCitiesCounties.02.htm
———————-

How to get out of it:

1. Roll back benefit levels to pre-pension-boost levels. (Will probably be done with most new hires, and is already being enacted in many places, but they might not be able to do it to existing employees, which is fine…read on.)

2. Shift the burden of pension contributions from the employer to the employee, which can be done during contract negotiations. (Also already being done, and is being rolled out across the state).

3. Change the contribution formula. Assumptions about investment returns have been delusionally optimistic. Change the return rate from 7-9% to <3%> (or worse?). By changing this figure, contribution requirements will soar (as they should), and once the local (and state) govts are freed from making these contributions, the result will be a 25-30% pay cut pretty much across the board as employees will be responsible for making up the shortfall (just estimating here, it could easily be more or less, but I’m not an actuary).
——–

Believe it or not, I think this is where they are going, and I believe it will work. No reneging on pension promises is necessary. No court battles, no BK, nothing illegal about it from what I can tell.

The thing is, they have to let #2 happen before #3 can happen. IMHO, they don’t want to stir things up, so nothing is official, but I watch these trends and see what might be coming.

Top this all off with additional pay cuts, and the problem can be “solved.”

It is already being done. People are getting worked up over something that they needn’t be worked up about.

BTW, is this inflationary or deflationary? (just have to poke at this some more) 😉

[CA renter]

Some history on why we’re in this mess (state and local):

http://www.caltax.org/member/digest/Apr2003/4.2003.Taylor-PensionCrisisSwampsCitiesCounties.02.htm
———————-

How to get out of it:

1. Roll back benefit levels to pre-pension-boost levels. (Will probably be done with most new hires, and is already being enacted in many places, but they might not be able to do it to existing employees, which is fine…read on.)

2. Shift the burden of pension contributions from the employer to the employee, which can be done during contract negotiations. (Also already being done, and is being rolled out across the state).

3. Change the contribution formula. Assumptions about investment returns have been delusionally optimistic. Change the return rate from 7-9% to <3%> (or worse?). By changing this figure, contribution requirements will soar (as they should), and once the local (and state) govts are freed from making these contributions, the result will be a 25-30% pay cut pretty much across the board as employees will be responsible for making up the shortfall (just estimating here, it could easily be more or less, but I’m not an actuary).
——–

Believe it or not, I think this is where they are going, and I believe it will work. No reneging on pension promises is necessary. No court battles, no BK, nothing illegal about it from what I can tell.

The thing is, they have to let #2 happen before #3 can happen. IMHO, they don’t want to stir things up, so nothing is official, but I watch these trends and see what might be coming.

Top this all off with additional pay cuts, and the problem can be “solved.”

It is already being done. People are getting worked up over something that they needn’t be worked up about.

BTW, is this inflationary or deflationary? (just have to poke at this some more) 😉

[CA renter]

Some history on why we’re in this mess (state and local):

http://www.caltax.org/member/digest/Apr2003/4.2003.Taylor-PensionCrisisSwampsCitiesCounties.02.htm
———————-

How to get out of it:

1. Roll back benefit levels to pre-pension-boost levels. (Will probably be done with most new hires, and is already being enacted in many places, but they might not be able to do it to existing employees, which is fine…read on.)

2. Shift the burden of pension contributions from the employer to the employee, which can be done during contract negotiations. (Also already being done, and is being rolled out across the state).

3. Change the contribution formula. Assumptions about investment returns have been delusionally optimistic. Change the return rate from 7-9% to <3%> (or worse?). By changing this figure, contribution requirements will soar (as they should), and once the local (and state) govts are freed from making these contributions, the result will be a 25-30% pay cut pretty much across the board as employees will be responsible for making up the shortfall (just estimating here, it could easily be more or less, but I’m not an actuary).
——–

Believe it or not, I think this is where they are going, and I believe it will work. No reneging on pension promises is necessary. No court battles, no BK, nothing illegal about it from what I can tell.

The thing is, they have to let #2 happen before #3 can happen. IMHO, they don’t want to stir things up, so nothing is official, but I watch these trends and see what might be coming.

Top this all off with additional pay cuts, and the problem can be “solved.”

It is already being done. People are getting worked up over something that they needn’t be worked up about.

BTW, is this inflationary or deflationary? (just have to poke at this some more) 😉

[CA renter]

Some history on why we’re in this mess (state and local):

http://www.caltax.org/member/digest/Apr2003/4.2003.Taylor-PensionCrisisSwampsCitiesCounties.02.htm
———————-

How to get out of it:

1. Roll back benefit levels to pre-pension-boost levels. (Will probably be done with most new hires, and is already being enacted in many places, but they might not be able to do it to existing employees, which is fine…read on.)

2. Shift the burden of pension contributions from the employer to the employee, which can be done during contract negotiations. (Also already being done, and is being rolled out across the state).

3. Change the contribution formula. Assumptions about investment returns have been delusionally optimistic. Change the return rate from 7-9% to <3%> (or worse?). By changing this figure, contribution requirements will soar (as they should), and once the local (and state) govts are freed from making these contributions, the result will be a 25-30% pay cut pretty much across the board as employees will be responsible for making up the shortfall (just estimating here, it could easily be more or less, but I’m not an actuary).
——–

Believe it or not, I think this is where they are going, and I believe it will work. No reneging on pension promises is necessary. No court battles, no BK, nothing illegal about it from what I can tell.

The thing is, they have to let #2 happen before #3 can happen. IMHO, they don’t want to stir things up, so nothing is official, but I watch these trends and see what might be coming.

Top this all off with additional pay cuts, and the problem can be “solved.”

It is already being done. People are getting worked up over something that they needn’t be worked up about.

BTW, is this inflationary or deflationary? (just have to poke at this some more) 😉

[CA renter]

Some history on why we’re in this mess (state and local):

http://www.caltax.org/member/digest/Apr2003/4.2003.Taylor-PensionCrisisSwampsCitiesCounties.02.htm
———————-

How to get out of it:

1. Roll back benefit levels to pre-pension-boost levels. (Will probably be done with most new hires, and is already being enacted in many places, but they might not be able to do it to existing employees, which is fine…read on.)

2. Shift the burden of pension contributions from the employer to the employee, which can be done during contract negotiations. (Also already being done, and is being rolled out across the state).

3. Change the contribution formula. Assumptions about investment returns have been delusionally optimistic. Change the return rate from 7-9% to <3%> (or worse?). By changing this figure, contribution requirements will soar (as they should), and once the local (and state) govts are freed from making these contributions, the result will be a 25-30% pay cut pretty much across the board as employees will be responsible for making up the shortfall (just estimating here, it could easily be more or less, but I’m not an actuary).
——–

Believe it or not, I think this is where they are going, and I believe it will work. No reneging on pension promises is necessary. No court battles, no BK, nothing illegal about it from what I can tell.

The thing is, they have to let #2 happen before #3 can happen. IMHO, they don’t want to stir things up, so nothing is official, but I watch these trends and see what might be coming.

Top this all off with additional pay cuts, and the problem can be “solved.”

It is already being done. People are getting worked up over something that they needn’t be worked up about.

BTW, is this inflationary or deflationary? (just have to poke at this some more) 😉

[CA renter]

[quote=pjwal]It’s an uncertainty that might force unions and retirement systems to take a deal without forcing a judge to rule on the issue.
…
In short, bankruptcy levels the playing field. Everyone owed money must jockey for position. It’s more likely in bankruptcy, Shea said, for a party to settle than to bet on victory particularly when so much money is at stake.
…
A bankruptcy might not wipe pension obligations away, but it could make the debt smaller.

Everyone always takes things out of context. No one is talking about completely wiping pension obligations off the books. But somehow, through bankruptcy or otherwise, the obligation needs to be reduced. I vote for bankruptcy.[/quote]

Pensions are one of the top priorities, just behind GO bonds, IIRC.

They will cut everything else (school funding, prisons, hospitals, state parks, etc.) before the pensions, so not sure a BK would actually reduce pension obligations. They don’t have to jockey for priority because they already have priority. That’s what people mean when they say, “we can’t do anything about it.”

But see what **can** possibly be done (based on my limited understanding) in my above post.

[CA renter]

[quote=pjwal]It’s an uncertainty that might force unions and retirement systems to take a deal without forcing a judge to rule on the issue.
…
In short, bankruptcy levels the playing field. Everyone owed money must jockey for position. It’s more likely in bankruptcy, Shea said, for a party to settle than to bet on victory particularly when so much money is at stake.
…
A bankruptcy might not wipe pension obligations away, but it could make the debt smaller.

Everyone always takes things out of context. No one is talking about completely wiping pension obligations off the books. But somehow, through bankruptcy or otherwise, the obligation needs to be reduced. I vote for bankruptcy.[/quote]

Pensions are one of the top priorities, just behind GO bonds, IIRC.

They will cut everything else (school funding, prisons, hospitals, state parks, etc.) before the pensions, so not sure a BK would actually reduce pension obligations. They don’t have to jockey for priority because they already have priority. That’s what people mean when they say, “we can’t do anything about it.”

But see what **can** possibly be done (based on my limited understanding) in my above post.

[CA renter]

[quote=pjwal]It’s an uncertainty that might force unions and retirement systems to take a deal without forcing a judge to rule on the issue.
…
In short, bankruptcy levels the playing field. Everyone owed money must jockey for position. It’s more likely in bankruptcy, Shea said, for a party to settle than to bet on victory particularly when so much money is at stake.
…
A bankruptcy might not wipe pension obligations away, but it could make the debt smaller.

Everyone always takes things out of context. No one is talking about completely wiping pension obligations off the books. But somehow, through bankruptcy or otherwise, the obligation needs to be reduced. I vote for bankruptcy.[/quote]

Pensions are one of the top priorities, just behind GO bonds, IIRC.

They will cut everything else (school funding, prisons, hospitals, state parks, etc.) before the pensions, so not sure a BK would actually reduce pension obligations. They don’t have to jockey for priority because they already have priority. That’s what people mean when they say, “we can’t do anything about it.”

But see what **can** possibly be done (based on my limited understanding) in my above post.

[CA renter]

[quote=pjwal]It’s an uncertainty that might force unions and retirement systems to take a deal without forcing a judge to rule on the issue.
…
In short, bankruptcy levels the playing field. Everyone owed money must jockey for position. It’s more likely in bankruptcy, Shea said, for a party to settle than to bet on victory particularly when so much money is at stake.
…
A bankruptcy might not wipe pension obligations away, but it could make the debt smaller.

Everyone always takes things out of context. No one is talking about completely wiping pension obligations off the books. But somehow, through bankruptcy or otherwise, the obligation needs to be reduced. I vote for bankruptcy.[/quote]

Pensions are one of the top priorities, just behind GO bonds, IIRC.

They will cut everything else (school funding, prisons, hospitals, state parks, etc.) before the pensions, so not sure a BK would actually reduce pension obligations. They don’t have to jockey for priority because they already have priority. That’s what people mean when they say, “we can’t do anything about it.”

But see what **can** possibly be done (based on my limited understanding) in my above post.

[CA renter]

[quote=pjwal]It’s an uncertainty that might force unions and retirement systems to take a deal without forcing a judge to rule on the issue.
…
In short, bankruptcy levels the playing field. Everyone owed money must jockey for position. It’s more likely in bankruptcy, Shea said, for a party to settle than to bet on victory particularly when so much money is at stake.
…
A bankruptcy might not wipe pension obligations away, but it could make the debt smaller.

Everyone always takes things out of context. No one is talking about completely wiping pension obligations off the books. But somehow, through bankruptcy or otherwise, the obligation needs to be reduced. I vote for bankruptcy.[/quote]

Pensions are one of the top priorities, just behind GO bonds, IIRC.

They will cut everything else (school funding, prisons, hospitals, state parks, etc.) before the pensions, so not sure a BK would actually reduce pension obligations. They don’t have to jockey for priority because they already have priority. That’s what people mean when they say, “we can’t do anything about it.”

But see what **can** possibly be done (based on my limited understanding) in my above post.

[Author]

Posts