States who defer making contributions to cash-strapped public pension funds spend billions on tax subsidies while politicians look to employees for the money needed to shore up the retirement systems, an examination of 10 states found.
Good Jobs First, a non-profit, non-partisan research center that focuses on accountability in economic development, chose states facing underfunded pension plans that are generating controversy.
"We found that in all 10 states, the total annual cost of corporate subsidies, tax breaks and loopholes exceeds the total current annual pension costs for the main public pension plans administered by the states," the report stated. "In some cases the differences are enormous."
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The idea behind the report was to put pension costs into context of how much revenue the states lose as the result of tax breaks and accounting loopholes.
"Before you get hysterical [and cut pension benefits or raise employee contributions] you need to look at other places where revenue leaks out," said Phil Mattera, the author of the study. "States need to take more of a balanced approach before making state employees bear such a large burden."
Of the 10 states examined, Louisiana had the worst ratio of pension costs to subsidies. In that state, costs were $348 million per year compared to subsidies that totaled $1.8 billion for a ratio of 19 percent.
Florida was the only other state with a ratio below 30 percent, coming in at 24 percent, although five in all were below 50 percent.
The 10 states, in alphabetical order, and their ratios were: at were Arizona, 86 percent; California, 70 percent; Colorado, 30 percent; Florida, 24 percent; Illinois, 77 percent; Louisiana, 19 percent; Michigan, 32 percent; Missouri, 51 percent; Oklahoma, 46 percent; and Pennsylvania, 51 percent.
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