The Amount of Hidden Debt Will Stun Taxpayers

NCPAAs someone who has seen local governments at work (especially school districts), reading this from the NCPA is no surprise to me. It’s just one more reminder that Plato was right when he said (circa 4th century B.C.) – if you’re not going to serve, don’t be surprised when you’re governed by your inferiors:

Taxpayers around the country will soon be grappling with massive amounts of debt they had no idea they were responsible for. The hidden debt is the result of $7.3 billion in promises that were made by state legislators but never approved by taxpayers, says Steven Malanga, a senior fellow at the Manhattan Institute.

  • Illinois is now facing a lawsuit charging that state officials made misleading remarks about the state’s pension system and failed to disclose the enormous amount of unfunded obligations.
  • In Sacramento, California, the city faces more than $2 billion in obligations, mostly pensions and retiree health care; the city only has 477,000 residents and an annual budget of $366 million.
  • In Chicago, retiree health care expenditures are projected to increase from $109 million in the 2013 budget to $541 million in a decade.

Collectively, state and local governments are estimated to owe $7.3 trillion and most of this debt was never approved by taxpayers. Despite the fact that most state constitutions and many municipal charters limit borrowing and mandate voter approval, politicians have crafted ways to avoid these limitations.

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