New ideas to better the Old Line State
Yep, we're in the hole
Originally published in the Baltimore Examiner
By Baltimore Examiner Editorial Board
Published on Sunday, November 16, 2008
MPPI IN THE NEWS
Forget your credit card debt and your mortgage. And forget the lousy state revenue numbers for October reported Thursday by Comptroller Peter Franchot. In his upbeat words, "the worst news may also not be readily apparent - the strong likelihood that the poor to abysmal October results do not reflect the full effect of the marked deterioration of the nation's economy over the last two months."
Marylanders are a lot more in the hole than we realized.
As the Maryland Public Policy Institute and Calvert Institute recently reported, state and local governments - read, taxpayers - are on the hook for about $50 billion in unfunded pension and other post-employment benefits promised by politicians to state and local workers.
That translates to about $24,000 for every private sector worker in Maryland. You read that right. That's a down payment on a house, a new car or college tuition.
And that is a low-ball estimate since the $50 billion was tabulated before last month's precipitous market fall. To give you an example of what is going on around the state, Baltimore City's funds lost a combined $600 million from July 1 through Sept. 30.
There should be no consolation in the fact that taxpayers throughout the United States face the same issue. It just means the collective agony is going to be big. Very big.
That pie-in-the-sky estimate of $600 million in slots revenue per year won't even scratch the surface of this debt. Nor will it pay for the new universal health care proposal being bantered about by activists estimated to cost $15.5 billion in the first five years.
Unless municipalities and the state act soon, cutting services and/or raising taxes will be the only way to pay for public employee benefits. Ending hefty permanent benefit increases when the stock market performs well, as Baltimore Mayor Sheila Dixon has proposed, and raising employee contributions and reducing benefits as other states are considering makes sense. So does shifting from defined benefit programs to sustainable defined contribution programs like the vast majority of private sector workers.
What's not OK is forcing those of us who pay the salaries of government workers to sacrifice even more of our hard-earned dollars to fund public employee retirement benefits that the market, common sense and Gov. Martin O'Malley's "one Maryland" mantra make impossible.
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