State government employment has grown 16% in the past fifteen years. Salaries and pension obligations mount, paralleling that increase. Medicaid and other state spending has risen, along with state employee rolls. It’s no wonder that state budgets are bursting their bounds.
Moreover, state and local governments are beholden to public employee labor unions. These politically oriented groups keep the contractual agreements made in boom times under severe pressure even when recessions call for belt tightening. Retirement fundings are particularly out of kilter.
Something will have to be done fast by willing state politicians. Up to now they have fudged their books by assuming, falsely, that they will earn more on public pension assets than they can ever hope to make in the future.
The solution will only be to elect officials who take the matter in hand. Force the unions to take less or force layoffs. I will comment on state bankruptcy possibilities in the future.
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