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They should not reduce employee pensions. Those people had a deal for that. They should do away with giving any new ones.
The Constitution explicitly prohibits any state from abrogating or impairing any contract they make. It's flat out unconstitutional for any state to cut state employee pensions if they were promised in a union contract. A state would default on its bonds first, while still making pension payments.
What happens when CA goes belly up? We're all gonna move to red states and start voting blue and turn them liberal.
LOL. We have an infectious mental illness, remember?. We will turn you all blue. Run now while you can.
That goes BOTH ways: A LOT of "deep blue" people become more "red" when they move to our red states. lol
Illinois is one of 7 states that protects accrued pensions within the state constitution. Options available to most states do not apply in Illinois. The state cannot cut accrued pension benefits.
The state legislature can change that constitutional restriction. At some point they will be forced to take some kind of action.
The Constitution explicitly prohibits any state from abrogating or impairing any contract they make. It's flat out unconstitutional for any state to cut state employee pensions if they were promised in a union contract. A state would default on its bonds first, while still making pension payments.
California actually funds the pension system pretty well. At last check (2015) it was around 77% funded.
Illinois has a much bigger problem, with funding down in 40% neighborhood. Even states like Kentucky manage to do better.
Governor Brown’s May Revised Budget reveals that the State of California’s and the University of California’s unfunded pension liabilities have skyrocketed by 22 percent in the last year.
The State of California is notorious for predicting spectacularly high pension investment returns, and then admitting lousy performance. But Governor Brown’s 2017-18 May Revised Budget admitted for the first time that the state’s and UC’s long‑term pension and healthcare liabilities jumped by $51 billion in the last year to $279 billion, “due to poor investment returns and the adoption of more realistic assumptions about future earnings.â€
The Constitution explicitly prohibits any state from abrogating or impairing any contract they make. It's flat out unconstitutional for any state to cut state employee pensions if they were promised in a union contract.
Where is that provision (I assume you mean the US constitution)?
Gina Raimondo (D), current Governor of Rhode Island did just that when she was RI State Treasurer in 2011. You got this wrong.
Quote:
On November 17, 2011, the state House of Representatives and Senate, by respective margins of 57-15 and 35-2, passed the Rhode Island Retirement Security Act (RIRSA). Gov. Chafee signed the bill into law the next day. The measure, which took effect the following July, raised the minimum retirement age for state employees, suspended annual COLA increases, and replaced the traditional defined-benefit pension system with a hybrid that included a 401(k)-style plan.
Wisconsin took action of a different sort, as did Michigan. Any and all contracts are subject to renegotiation if not outright abrogation.
States can and will get public pensions right sized. It is tough for pensioners and current employees who are maybe too reliant on government largess. Their anger is rightfully directed not at those who are making the difficult adjustments, but those who over-promised.
Quote:
Originally Posted by Elliott_CA
The Constitution explicitly prohibits any state from abrogating or impairing any contract they make. It's flat out unconstitutional for any state to cut state employee pensions if they were promised in a union contract. A state would default on its bonds first, while still making pension payments.
As I understand it, there is no legal provision for states to declare bankruptcy. So at some point, these states will have to do one or more of these things;
Cut expenses
Increase taxes
Stop paying creditors
Reduce employee pensions
Or, they can get Congress to pass a law allowing states to declare bankruptcy just like municipalities have done under Chapter 9.
In any event, millions of people will get screwed due to years of inept leadership in these states just like in Puerto Rico.
LOL. Wasn't it you people who kept saying during the election that using bankruptcy is smart business???? I find the OP's naivete on the subject amusing but not surprising.
There is no chance that the 6th largest economy in the world will go bankrupt.
In the highly unlikely event that it does, the Federal government will work day and night to save it. You will see politicians blast CA in public but behind close doors they will be CA's biggest allies.
Haven't some of you learned anything from the Republican economic crash of 2008??? There is such a thing as too big to fail and CA is one of them. Same for IL.
And even if CA declares bankruptcy, so what? Its residents will still be flying high.
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I find the OP's naivete on the subject amusing but not surprising.
