Gov’t Gone Wild! Illinois Pension Benefits Have Grown 6 Times More Than Total State General Revenue Growth (236%)

This is a syndicated repost courtesy of Online Course Notes For Financial Markets and Banking. To view original, click here. Reposted with permission.

We already know that the US Federal government is spending (and borrowing) at unsustainable rates.

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Much of the growth in Federal spending is due to Medicare and Medicaid.

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Although defense spending is no slouch.

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But State governments are no pikers at spending either. Or at least promising pensions to public sector workers.

Take Illinois (I confess, I used to live in Chicago).  Look at this chart of Illinois promised state pension benefits compared to other metrics such as state general revenues and personal income.

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Since 1987,Illinois total state pension benefits owed to workers have grown multiple times faster than any other measure of the economy. Total benefits have grown at an annually compounded rate of 8.8 percent over the past three decades. Compared to 1987, pension benefits are up 1,061 percent, which is:
○ 6 times more than total state general revenue growth (236 percent) over the same time period;
○ 8.4 times more than median household income growth (127 percent); and
○ 9.5 times faster than inflation (111 percent).

In 1987, households were on the hook for $4,300 in promised pension benefits. That amount swelled to over $43,000 per household by 2016.

Illinois had the third-highest pension benefit growth in the nation, higher than all its peer states. Only New Jersey and New Hampshire have faster growing pension benefits.
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Fortunately for The Big Ten Conference, Wisconsin, Michigan and Ohio all have less than 4% annual growth in pension liabilities. Unfortunately, Rutgers (New Jersey), Illinois and Northwestern (Illinois) followed by Nebraska are all at or above 6.6% annual growth.

And no state has a fully-funded pension for state  workers (state average is only 66%).

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Unfortunately, we have the public sector pension boogie with no end in sight, other than massive growth in state and local taxes.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases I receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

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