Adjusted for inflation, state and local government revenues have more than doubled since the 1970s. But state and local politicians haven’t collected nearly enough taxes to pay for the retirement promises they’ve made to their friends in government employees unions.
Stress testing is a rigorous analysis showing likely outcomes under various scenarios of tax collection, market performance and fiscal health, and provides an underpinning for policymakers to understand and respond to the impact of economic volatility on pension plans.
A public pension used to be an ironclad promise. That is no longer the case. Many cities and states can no longer afford the unsustainable retirement promises made to millions of public workers over many years. By one estimate they are short $5