California may be boasting a $1.2 billion budget surplus this year, but it and other states still face the growing problem of what to do about pensions for state workers, according to The Economist.
“California still has a mammoth long-term pension gap. If it used the same pension accounting standards as private companies must, its total debts would be a terrifying $1 trillion.” With people getting older, the state is facing the need to pay more money to an ever growing number of retirees, without a matching increase in workers and funds.
California isn’t the only state facing these problems. “California is far from alone In Illinois [pensions] are only 40 percent funded; in New Jersey, 53 percent.” With the ever-growing cost of retirement, and with more and more people retiring, “the eventual result will be a huge rise in taxes when the pension funds run out of money. The burden will fall on private-sector employees, who do not qualify for such a gilded retirement. They will not be happy.”
Freeman Stevenson is a Snow College grad and is the DeseretNews.com opinion intern. Reach me at fstevenson@deseretdigital or @freemandesnews
Copyright 2015, Deseret News Publishing Company