The good folks at the Yankee Institute for Public Policy have just released a gut-punch of a report [PDF] revealing that “Connecticut’s true unfunded liability for pension and other retirement benefits is much bigger than widely assumed.”
Connecticut’s pension system serving 175,000 active and retired state employees, teachers, and those in the judicial system reports an unfunded liability approaching $16 billion — an amount nearly equal to the state’s entire annual budget. Yankee’s analysis concludes the real unfunded liability is between $51 billion and $81 billion — or at least three times as much. Yankee believes the state has counted on unrealistic assumptions about discount rates and rates of return in underestimating the real magnitude of the problem. Yankee concludes that Connecticut should move swiftly from a defined benefit to a defined contribution pension plan for government workers as part of getting retiree liabilities under control, or else the state will face yet more pressure for yet higher taxes.
“Benefit reform and modernization needs to be a topic of discussion for state level candidates of all parties in this year’s elections,” said Fergus Cullen, Executive Director of the Yankee Institute, the free-market think tank that published the study. “We hope our report will serve as a primer for that discussion,” Cullen said.
If Attorney General and Democratic Senate candidate Richard Blumenthal thought the old man down the block had cheated Little Billy out of five cents at his lemonade stand, he’d be there with news cameras in tow, vowing justice (after all, he’s the self-proclaimed protector of the Nutmeg State consumer) and haranguing the old geezer for the nickel (and, after the cameras had gone, probably fining Billy for operating the stand without a license).
Since time immemorial now Good Old Richard has been a state leader while CT tax “consumers” (you know, the kind that send their money to Hartford, never to see it return) have been pushed to the edge of this potential $81 billion pension-liability abyss. $81 billion! OK, let’s take the low end. $51 billion! Only 3 million people live here — how the heck can this be managed? Yo Mr. A.G.: Where were the press conferences warning us about this unfolding fiasco? Or were you too busy suing small businesses to notice?
By the way, this staggering figure doesn’t include the unfunded health-care benefits for municipal retirees, for which CT taxpayers — albeit on a town-by-town basis — are on the hook.