63 Of America’s Largest 75 Cities Are COMPLETELY BROKE

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Short story. Los Angeles' debt is so large that every resident would have to pay $6000 to bring the city back into the black. Irvine, just several miles away, could give each city resident $4,400 and still be financially solvent.

 

socialism

 

Where do I find a list of the big cities in good shape LOL?

That’s terrible and not surprising. The federal government has done the same thing, so they are only doing what they’ve seen work. Nice to have stuff exposed though.

 

Not to be too political, but a lot of those cities are ran by democratic government. Just shows that outrageous govt spending and programs, isn’t always the solution. Doesn’t surprise me LA is such in terrible shape, and San Francisco... I love California, I live here, but the people who run this state... ugh.

 

It’s awesome our country has a generous heart and wants to assist those in need regardless of legal status, foreign countries, special needs, vets, elderly, but our leadership seems to be clueless about dealing with financial realities.

I’m not sure I want to be here when the country finally goes bankrupt. The whole world will be in disarray.

 

30+ years ago the private sector (me included) realized that defined benefit pension plans could not work- future age demographics were pretty obvious even then. What we all did is pivoted to defined contribution plans- 401ks with a match, SERPs, 457's etc.

Meanwhile, because long term planning never got anyone elected, the public sector just kept on trucking with defined benefit plans but the decisions makers knew full well that there would be a day of reckoning. That day is here.

Illinois, and Chicago in particular is Exhibit A to all of this. The state has a $130B++ unfunded liability, that is growing every year, with no pension reform in sight. Chicago is $42B+ in the red. To put that in perspective, the City's entire annual budget is about $9B, of which $1B goes to pension plans every year.

Financially speaking, Chicago and Illinois are toast. There are no tax increases, spending cuts etc that can plug this kind of hole. Chicago, after trying all sorts of desparate moves, will have to file BK; then the question becomes- are pension recipients in front of the line (ahead of bond holders specifically) or are they general creditors? We dont know that answer yet, but will find out.

Next question- can a state file for chapter 9 bankruptcy? Short answer is ... no one knows.

All that to say, Illinois and Chicago are the canary in the mine for CA. We have the same issues baked in here- CalPers is 32% underfunded right now, and the gap is growing. Shoot, many D's are speaking out about the train wreck that is coming that they helped create. When Jerry Brown becomes a voice of reason and moderation in your state, you are officially $crewed.

 

That is exactly the question + a bit more.

What city AND state have sound balance sheets, without huge unfunded pension obligations? Answer as to states: North Carolina, Nebraska, Iowa and Utah are the best states, fiscally speaking. Cities must now discloses unfunded pension liabilities (and not over state rates of return), so look at those as well for a particular city. For example, WA state and OR have well funded state plans, but Portland and Seattle are a mess.

If you move to a city that is in good fiscal shape but the state is not (and vice versa), you WILL pay the price in higher taxes/ reduced services.

Now my disclaimer: I am NOT a Republican. Far from it. I dont believe that R's have been a whole lot better at fiscal restraint than the Ds have been. At least most Ds are intellectually honest when it comes to finances (tax and spend); while the Rs say one thing and do another.

 

I have actually found quite the opposite to be true, but I doubt either one of us really feel like pulling up examples LOL

 

Illinois is going to be interesting. States cannot declare bankruptcy at this time; they will likely not be successful at getting a bailout from the federal government because of the precedent it would set. Not sure what is going to happen in the event of a default by a state, last time that happened was in 1933. Chaos for sure, beyond that is anybody's guess.

The Illinois state constitution bans cities and other municipal entities from reducing pension benefits or declaring bankruptcy. The state supreme court upheld the can't reduce pensions clause when the governor tried it a few years ago. They essentially said the people and the legislature put the amendments there, now they have to take it out. But the public unions will never allow that. So both Chicago city and Illinois state governments have been playing hide the potato games. They raised income taxes by 60% and double property taxes a few years ago. All that did was spark an increase in Illinois taxpayers moving out of state, mostly commonly to one of the surrounding states. It's so bad now that the bond rating company Moody's recently warned the state that raising taxes further would likely be counterproductive. Think rock and hard place.

Basically what happens with pensions is that when enough employees have retired, the city or the state ends up paying 2 or more retirees for every active position. Over time, that becomes unsustainable and private industry started to figure that out in the late 1970's and in the 1980's which is why very, very few companies offer pensions anymore. The large company I left in 2000 stopped offering the pension to new employees in 2005 and froze pensions in 2016 for active employees with pre-2005 seniority. I took a buyout in 2012 when they were in a mad rush to get as much of their existing pension obligations off the books as they could.

 

Yes, you'd think some of the smartest people in the world would have run the numbers on that in advance. We have a LOT of unsustainable debt. Relying on the US Gov't for your retirement will be a losing proposition IMHO. The only way I see them meeting those obligations in 20 years is major devaluation of the dollar. You can't hide from it. Oh you'll get your $1500 a month, but it won't even buy your groceries by then.

As much as Trump is an idiot, we do need more business minded rational financially sound leaders making the decisions with the biggest budgets in the world. It's unacceptable for the richest nation on earth to be trillions of dollars in debt. It's just absurd. Some say it's strategic and keep our biggest threats/potential enemies at bay because they are afraid of losing all of their investment in our country, but time will tell.

 

California is in a similar position. Don’t get me wrong, I’m a cop and love the idea of a retirement, but it’s the very thing that’s going to drag the state through the mud financially. It’s un-sustainable, and will be the thing that brings California down. We have one of the highest paid government positions in the country, we have calpers which is a guaranteed pension that is government ran. Anything the government tries to do that a private company should be handling, they handle it poorly.

 

https://www.google.com/amp/s/amp.sa...rnment/the-state-worker/article198062129.html