Well at least we aren’t Illinois, according to Nick Della Volpe on the City Council forum:
Illinois pension system is “headed for a meltdown.” It is apparently some $200 billion underfunded–although it conveniently reports less (about $95 billion) by using an assumed, and unrealistic, 8% growth rate or discount rate (compare that to an actual 0.75% realized by their teachers fund in 2012 and less than 0.1% by other state employees’ funds). The WSJ reports that Illinois business groups have declared the state’s pension crisis “so severe” that it is now “unfixable.” The WSJ adds that the state’s problem is “worsening so fast that
the usual menu of reforms won’t be enough to keep public pensions from sucking taxpayers and whole cities into its yawning maw.” The Governor is trying to rally public support for drastic pension reform, including a possible income tax
to help fund it.
The Councilman then relates this to the city, saying that new revenue sources are needed here.
As it goes with these things, nothing is in a vacuum. He and others argued that the city needs to hang on to its money instead of plunking cash on the Fulton Bellows/University Commons number.
And this past weekend NY Times ran a piece on how the federal government’s possible spending cuts may impact states and municipalities.
… there is a long history of the federal government’s giving short shrift to the needs of states and cities — by making cuts in federal aid that forced service cuts or tax increases at the local level, or by passing laws requiring localities to take expensive actions without giving them the money to do so.
So in recent days, more than a dozen mayors with the United States Conference of Mayors have gone to Washington to lobby lawmakers. And last Monday, Mr. Markell, a Democrat, joined several governors from both parties to discuss the issue on a conference call with Vice President Joseph R. Biden Jr.
On the other hand are the expected revenues from property tax and sales tax from the Publix and Walmart at University Commons, which wound up being the winning argument from Council.
To bring this back to some kind of center, here’s Della Volpe’s conclusion:
Growing the city revenue pie, by attracting new businesses, will certainly help. So will smarter investing of pension plan assets. But everything needs to be on the table. More realistic pension growth assumptions are needed; so are cost limiting measures, like trimming back automatic COLA …
So what would the best places to trim in the city? How can the city get more money? That’s the heart of the issue. Keeping what’s here, and try to grow more.