Daily Digest 4/12 - Pensions Problems Multiply, Venezuelan Debts Coming Due Amid Crisis
Under HB 3158, contributions from pension fund members would increase by 91 percent on average, or $1.2 billion over 30 years. The members' benefits would also be cut by $1.4 billion, making the total proposed burden on first responders approximately $2.6 billion. In addition, the mayor wants to claw back $700 million of previously earned benefits from police and firefighter retirees.
The Hartland districts’ annual payments to the state-run retirement system have risen from $2.76 million in 2011 to $7.23 million in 2016. That increase represents $4.47 million per year that is no longer available to pay for textbooks, teacher raises or perhaps local property tax reductions instead of increases.
The increase reflects Calpers’ decision in December to roll back the expected rate of return on its investments. That means the system’s 3,000 cities, counties, school districts and other public agencies will have to put more taxpayer money into the fund because they can’t count as heavily on anticipated investment income to cover future benefit checks.
But it comes at price. The budget dips $18.5 million into the city's rainy day fund balance, which would leave only $27 million left. Miner said she believes it will be the most taken from the fund balance during her administration. She attributed that to things like higher pension and healthcare costs.
Twenty years after the Asian financial crisis and a decade since the global credit crunch, the region is swimming in debt. The debt binge is spread across companies, banks, governments and households and is inflating bubbles in everything from the price of steel rebar in Shanghai to property prices in Sydney. As the Federal Reserve raises borrowing costs, that means debt is again a concern.
U.S. consumers have run up over $1 trillion on credit cards, hitting a level not seen since January 2009 and up 6.2 percent from a year ago. For comparison, wages are up less than 3 percent and the economy is growing just under 2 percent a year. Borrowers can only take on debt at twice the rate they increase the ability to service it for so long.
Venezuela's government and national oil company are expected to make nearly $3 billion in debt payments on Wednesday, literally taking food from the mouths of an increasingly restive public.
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