Pension & OPEB panel @ #BBwash is making the case that we are in deep trouble, w/little way out
— David Merkel (@AlephBlog) April 30, 2013
Bloomberg Link recently hosted a panel on the costs of healthcare for public retirees, pensions and public debt. Panel members included Richard Ravitch, who helped manage the New York City fiscal crisis in the 1970s when the bond market stopped lending to the city, and Ed Rendell, former governor of Pennsylvania. These men are two of muniland’s strongest war horses who have fought big governance battles. Bloomberg provided background for the discussion:
These so-called OPEB promises made by the 15 biggest cities alone total $115 billion, with an average burden of $2,300 for every man, woman and child, according to data compiled by Bloomberg. How will local governments manage to make good on their pledges without becoming insolvent? Will we see governments reduce benefits and raise their cost for current workers, as has been the case in several cities and states?
You can see the best of the panel in this replay from C-Span in minutes 15:40 through 26:60. It is truly the best discussion of this issue I have ever seen. OPEBs (other post-employment benefits) are liabilities of states and cities that must be paid in addition to unfunded pensions and municipal debt. Ravitch had some biting advice for Wall Street on pushing municipal debt that confiscates future revenues: