Fixing Milwaukee Notes: The Debt Problem

From the Milwaukee Journal:

Wisconsin’s largest local government employers have about $6 billion worth of health insurance and other non-pension benefits they have promised to future retirees that they have yet to save up for, according to a new report. Of the nearly $6 billion of retirement obligations identified in the report, about three-quarters, or more than $4.5 billion, is owed by taxpayers who support Milwaukee Public Schools, Milwaukee County and the City of Milwaukee.
The report says that if MPS were budgeting the full amount each year that accounting principles say it ought to set aside for future retirement benefits, the amount needed would come to more than $2,100 for each student in the district. That doesn’t include the costs of pensions.

To cover future obligations, a combination of two things must occur:

1) Current income from the taxpayers (individuals, and businesses) must be set aside to cover the NPV of the future obligations

2) The future pool of wealth/income must grow at a larger then current pace.

Not just for Fixing Milwaukee, but for the USA as a whole I have been recommending these three things:

1) Decouple pensions from single-employer long-term employment

2) Decouple Health Care from Employment

3) Concentrate public policy initiatives on enabling entrepreneurship and growth

4) Concentrate municipal governing (city, county, schools, other) on the essentials, cut the fat, cut the leftist driven feel-good, rather then do-good programs in order to reduce expenditures.

Update: Oops, I left out point 4 above. I also added a photo of mine.

Milwaukee’s Historical City Hall Building. When it was still under re-construction iin 2006. Over a swamp. Where it has since been found to be sinking into. How much money was wasted on it? I think renting office space would have been a better idea and a better use of the capital. The building is pretty though.

One Response

  1. I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

    Tim Ramsey

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