July 11, 2022 - Epoch Times
02:38
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| According to a recent report by American Legislative Exchange Council, California's unfunded pension liabilities are estimated to be at $1.5 trillion. | |
| That's a trillion with a T. That's about $38,000 of debt for each Californian. | |
| You may wonder, what are the unfunded pension liabilities and why we have so much of it? | |
| The city of Stockton filed for Chapter 9 bankruptcy and they eliminated their retiree medical plan altogether, just eliminated it. | |
| We guarantee that our government employees will receive a set amount of income at the time of their retirement. | |
| In some cases, people get up to 90% of their current pay for the rest of their lives This promise to the employees requires cities to invest enough money into the retirement accounts now, assuming these investments perform according to the plan. | |
| Most of the time, neither is achieved. | |
| Since California's pension benefit is very generous, It's hard for cities to keep up with the costs. | |
| What's happening with cities is that they have to reduce their staffing in order to make the payments. | |
| We have cities up and down California that have reduced their police departments and their fire departments by 25% just to be able to make the pension plan contributions. | |
| Are these pension payments realistic or will California face a pension crisis in the near future? | |
| You'll probably have to pay higher taxes. | |
| The city, using that example again, would probably have to raise the sales tax, which you can do above the state rate of seven and three quarters to another two percent. | |
| But then you're kind of left without very many options. | |
| California government decided to send $1,050 to 23 million residents. | |
| Could the state have used some of these funds to fix the pensions? | |
| The state received more money and revenues than it was allowed to receive under what's called the GAN limits. | |
| And you can only spend as much as your growth of inflation plus population growth. | |
| And if it goes above that, you have to rebate. | |
| To understand more about the pension liabilities we are facing, I sat down with former California State Senator John Moorlach. | |
| He served on the California State Public Employee Retirement Committee. | |
| He discussed with me the impact of unfunded pension liabilities on cities and why he believes we're not dealing with the liabilities. | |
| I'm Siamay Korami. |
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