ABOUT THE RESPONSIBLE BUDGETS ACT
According to The Pew Foundation’s issue briefing of April 2017:
“The gap between the total assets reported by state pension systems across the United States and the benefits promised to workers, now reported as the net pension liability, reached $1.1 trillion in fiscal year 2015, the most recent year for which complete data are available. That represents an increase of $157 billion, or 17 percent, from 2014.
"In aggregate, the funded ratio of these plans dropped to 72 percent in 2015, down from 75 percent in 2014. Investment returns that fell short of expectations proved to be the largest contributor to the worsening fiscal position, with median overall returns of 3.6 percent.1 On average, state pension plans had assumed a long-run investment return of twice that—7.6 percent—for fiscal 2015.”
IT'S TIME TO PASS THE RESPONSIBLE BUDGETS ACT
Cities and Counties fare no better, with the total current funding gap estimated at over $4 trillion and growing.
This ticking time-bomb of underfunded public pensions and retirement healthcare benefits will leave states, cities, and counties with a future of dramatic tax increases, slashed
services and potential city, county and even state bankruptcies.
In a recent CBS 60-Minutes interview, noted financial analyst Meredith Whitney commented,
“The lack of transparency with the state disclosure is the worst I’ve ever seen. There’s not a doubt in my mind that you’ll see a spate of municipal bond defaults. You could see 50 to 100 sizable defaults.”
When asked by CBS’s Steve Croft why people aren’t paying attention, Whitney sagely said, “Because they don’t pay attention until they have to.”
Our job is to make them have to.
The Solution: Pass The Responsible Budget Act by Citizen Initiative Passing The Responsible Budget Act at the ballot will:
Bring transparency by requiring annual assessment of the pension and retirement healthcare liabilities and funding levels., using GAAP and the 10-year average return on investment, rather than an assumed return.
When pension and retirement healthcare liabilities are not adequately funded, it limits the annual general fund spending growth to no more than inflation and population.
Any revenue over population and inflation growth goes to pay down the pensions – starting with Police & Firefighter pensions. They become the first budget priority.
As a first step to finding the savings needed to ensure adequate funding, it ends retirement pensions and retirement healthcare benefits for newly elected officials.
By bringing to the voters for a public vote the Responsible Budget Act we are forcing the voters, the media and the politicians to finally focus on this ticking time-bomb before it’s too late.
Survey research in Arizona, Missouri and Oregon shows overall support ranging from 71% to 74%.
Majority support exists in each state among all demographic audiences.
Focus groups showed voter support deepening when the pension problems and the amendment are further discussed and explained.
While an active message campaign will be necessary to ensure victory, the activity of the campaign fulfills the first need identified by Meredith Whitney – force the voters and the politicians to focus on the problem.
Let’s be clear – The Responsible Budget Act does not in and of itself fix the problem. Rather it forces clarity on the problem and requires that the problem be addressed by those elected to lead, with the added stick of taking away their own benefits.
The Responsible Budget Act says,
Face the facts and make the facts public.
Don’t spend money we don’t have.
Don’t make promises we can’t keep.
Don’t kick the can yet again.
And politicians can no longer give themselves a taxpayer paid pension.