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Political excuses for increasing pension debt

Florida is not alone in hiding the truth about pension debt from their citizens and employees; all 50 states are guilty according to a report last week from State Data Lab who analyzed the publicly available statistics.

Just like spouses might hide credit card balances, states hide this debt from citizens and leave it for future taxpayers to pay.

Watchdog group “Truth in Accounting” recommends that states begin to dig out of their pension debt hole by adopting “FACT-Based Budgeting”, an acronym for Full Accrual and Calculation Techniques.

Pension debt could not be hidden in financial footnotes and appendices. Debt would have to be truthfully and transparently shown, on a timely basis, before budgets are passed. Each year, citizens could clearly see whether the budget causes debt to increase or be paid up. No longer could government “credit card” debt for today’s services be accumulated for future taxpayers to pay.

If FACT-Based Budgeting were adopted in Florida, every budget would include estimates of year-end debt, as well as current year spending. Cities who maintain their own pension plans, like the City of St. Augustine, should be included. Citizens could then see whether spending plans increase or decrease their state’s debt.

Only six states have less than $1 billion of pension debt: MT, NE, ND, SD, WI, WY

Common political excuses about state pension debt include:

Political Excuse

Truth

We make our annual contributions

 

Annual contributions are like paying the minimum balance on the credit card.The principal remains and grows.

We can pay it over time

 

The debt increases over time, withAccumulated interest

More employees joining the plan

More employees retiring

We don’t have the money to pay the balance

 

Pension costs are part of current compensationPensions should be funded yearly, along with salary

Future taxpayers will foot the bill for past services they did not receive

Our state says pension debt is less than your figures

Government accounting rules allow states to hide much of their pension debt from public view.The average state hides $10.4 billion of $11.7 pension debt off-balance-sheet

Michael Gold

St Augustine native, Michael Gold, is editor at Historic City News. He is an advocate for grassroots citizen journalism whose job is holding public figures accountable to the public. Founded on the Internet in March 2000, HCN has developed from a periodic newsletter, to an interactive platform, to a publication read by the area's most engaged citizens. Historic City News is focused on news originating from or having an impact on St Augustine and St Johns County. Contact by e-mail

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Categories: Budget and Finance, Economy, Government Transparency, Must Read, Policy, Politics, Social Issues, Taxes, Waste, Fraud and Abuse
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