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Government challenges

Government challenges

The significant cost of funding excessive post employee health benefits and excess bond debt for pension obligations has now become a tremendous financial burden. For decades now, local governments have doled out patronage by increasing pension benefits these costs impact the budget years later. Many State and Local governments across the U.S struggle to further increase its tax base revenue to try and keep up with yearly increasing cost of such programs.

Pension related costs and retiree healthcare expenses have risen exponentially in the decade since 1999. This frightening trend is true almost everywhere in America and it's simply not sustainable. A recent Pew research survey found that the gap between state assets and their obligations for public sector retirements benefits is $1.38 trillion. It rose by 9 percent in 2010 alone and it
will likely keep rising until these obligations are renegotiated.

The political and economic climate makes it very difficult for Governments to further increase its tax base revenue to try and keep up with yearly increasing costs of such employees. To keep up with burgeoning pensions, states and municipalities are slashing services which is also feeding into the unemployment problem. State taxpayers now have to come up with additional money to fund the pensions and retiree healthcare at the expense of other state expenditures for things like educations, social services, and infrastructure. It is important to note that this problem is shared by many cities, municipalities and states as well. To date, only when the money runs out have state and local governments begin to search for the necessary solutions. Fortunately, most states and municipalities with serious budget problems don’t have time to remedy pension and health care benefit shortfalls.

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