Wednesday, April 18, 2007

Reaping Our Ignorance

From the Kentucky Post:

Officials in Frankfort are cringing over the future of an underfunded state retiree benefits system predicted to run out of money in 2022. But in cities and counties across Kentucky, the crisis is already squeezing budgets like a massive vise. Struggling to meet dramatic increases in contribution rates caused by rising pension and retiree health insurance costs, local governments are desperately looking for ways to cut costs and raise revenue for already tight budgets.

The crisis is outlined in black and white: In 1988, local governments paid an amount equal to 8.22 percent of employee salaries into the state-run retirement benefits program for their nonhazardous-duty employees and an amount equal to 18.85 percent for their hazardous-duty workers. For the fiscal year that ends June 30, those contribution rates have risen to 13.19 percent and 28.21 percent, respectively. For the fiscal year that begins July 1, they will go to 16.17 percent and 33.87 percent, and by 2013, they're projected to be a whopping 30.75 percent and 60.99 percent. "It's like a meteor and you can't get out of the way," said Newport Finance Director Greg Engelman, who predicts the crisis, left unchecked, will force cities to merge, consolidate services, dissolve, go bankrupt or leave retirement plans unfunded.

Obviously, we should have solved pensions. However, we prioritized. We raised our speed limit.

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