Cities Face a Deepening Fiscal Crisis
By Steven Malanga
Source:http://bit.ly/964a36
A recent study of the 77 largest municipal pension systems by finance professors Joshua Rauh of Northwestern University's Kellogg School and Robert Novy-Marx of the University of Rochester estimates that total unfunded liabilities of America's municipal pension systems is well north of half a trillion dollars. On a per capita basis, the professors estimated that each household in the 50 largest cities and counties they studied owes an average of $14,165 for future retiree liabilities. This, of course, is in addition to the other debt these places owe, most especially their municipal debt. New York City taxpayers, for instance, owe about $65 billion of municipal debt on top of what Rauh and Novy-Marx estimate is $122 billion in unfunded pension obligations.....
The city with the highest per household unfunded liability in the nation is Chicago, $41,966 per household, or $45 billion in total obligations....
California is in particularly bad shape. San Francisco and Los Angeles are among the places with the greatest liabilities among cities, amounting to $34,940 and $18,643 per household, respectively....
The implications for taxpayers are staggering as well as retirees. this will force many municipalities to file bankruptcy to try and obtain some relief from the obligations. This does not have a happy ending.