TOP 10 states with the worst debt trouble are forced work states.
By by Kimberly Morin………After discovering that the Top 10 states with the highest tax rates were all Forced Union states, it comes as no surprise that the top states with the worst debt trouble are also Forced Union states. Back in January Forbestallied up several factors to identify which states were in the worst debt trouble (50 being the worst). The ‘Debt Per Capita and Unfunded Pensions Per Capita’ number is how much is owed per person in the state. Forbes looked at the following:
The metrics we looked at for each state included unfunded pension liabilities, changes in tax revenue, credit agency ratings, debt as a percentage of Gross State Product, debt per capita, growth expectations for employment and the state economy, net migrations and a moocher ratio that compares government employees, pension burdens and Medicaid enrollees to private-sector employment.
Forced Union vs Right-to-Work States:
Of the top 15 states with the worst debt troubles every one listed is a Forced Union state other than Mississippi and Louisiana. These states are outliers because they have assumed larger debt due to rebuilding after the devastation of Hurricane Katrina. Of the top 15 states with the least debt troubles, all but 4 (New Hampshire, Montana, Colorado and Indiana) are Right-to-Work states. Note that in 2005 Governor Daniels of Indiana revoked the collective bargaining rights of public sector unions. It is also notable that the Forced Union states have a higher percentage of unionized government workers than the Right-to-Work states.
Interesting or expected? Is this completely the fault of the Governors for continually ignoring this ever growing problem or the State Legislatures? Public sector Unions have been able to make sweet pension and retirement benefit deals all across the country but they absolutely have more power in forced union states, especially when they ‘collectively bargain’ with the very people they elect – Democrats. This one-sided collective bargaining is no bargain for the taxpayers who are responsible for paying for this debt, the pension bills and the unfunded pension liabilities that will be coming up in future years.
According to Forbes:
The pension problem for state and city governments is one of the biggest debt hurdles localities face. The U.S. Government Accountability Office (GAO) released a study in November that examined the unfunded pension liabilities for the 50 states and 39 largest local governments. It found that these entities had liabilities exceeding $530 billion, led by California on the state level at $62 billion and New York City on a city basis at $60 billion.
Forbes turned to professors Robert Novy-Marx and Joshua D. Rauh to calculate the pension problem. They came up with numbers that are frighteningly different, yet to Forbes more accurate – $3.2 Trillion in cumulative unfunded pension liabilities. This number has also been touted as the more accurate number across the country by other financial experts and economists.
Even their estimates of future costs, high as they seem, are far lower than can be expected. Pension benefits are based on an employee’s final working years, for example, so as state workforces age the pension obligations rise dramatically. These estimates also don’t include any future workers added to the state payroll. (emphasis added)
To get an idea of what states are spending your hard-earned tax dollars on each year you can visit U.S. Government Spending. A few examples of the Forced Union states’ budgets and Right-to-Work states’ budgets for the year 2010 are listed below.
The first thing that screams out from the pie charts above is that Right-to-Work states spend more of their budget on Education than any of the Forced Union states. Funny how teachers’ unions are constantly whining about needing more money for education yet their beloved Forced Union states spend less on it. Pensions in the Forced Union states above are 14% of the total state budget for 2010 – in Illinois that is more than they spend on Education; in New Jersey and Wisconsin it is the same amount as spent on welfare. Virginia is the exception to the rule above with pension vs. welfare spending – they actually spend more on pensions than welfare.
What is going to happen when Governors and Legislators finally tackle the unfunded pension liabilities in the Forced Union states? The states cannot ask the already ‘Taxed Enough Already’ tax payers for an increase in taxes. The people simply cannot afford it. Cuts in spending will have to be made – where will that happen? Cuts to welfare? Cuts to health care? Even if unions agree to contribute more to their pension plans and retirement health care plans, it is not going to be enough to cover the liabilities that will be coming due. With collective bargaining, the unions can collectively bargain to change their contributions to a lower amount in the next contract round and will likely get that ‘bargain’ if a Democrat is in office.
The bottom line is that Forced Union states not only have the highest tax rates but they are also in the worst debt trouble compared to Right-to-Work states. Public Sector unions have too much power over the politicians and tax payers. The tax payers have absolutely zero say in any contract negotiations other than voting in politicians who are willing to ‘face the music’ and the reality of the outrageous retirement benefits that unions have been able to negotiate for years. With many states now trying to curb health and retirement benefit collective bargaining power and many attempting to become Right-to-Work states – the numbers, the history, the future and the facts state their cases for them quite clearly.