Whoops

Colorado and South Carolina have pulled back from making additional payments to their underfunded pensions, moves that may play out in other states that are struggling to balance budgets as the coronavirus ravages tax revenue. 

 Colorado eliminated a $225 million supplemental payment to the state’s Public Employees’ Retirement System, backing away from a 2018 plan to bolster the pension, which is about 60% funded after suffering from years of inadequate government contributions. 

South Carolina suspended a statutorily scheduled 1% employer contribution increase for the fiscal year beginning July 1. And New Jersey, which has one of the nation’s worst-funded pensions, has deferred a $950 million pension payment until September and Governor Phil Murphy’s plan to increase contributions 13% to $4.6 billion is in question.

They suffer a period of very low tax income.   And they have to cover the low returns.  State capitals ultimately pay much of the price for local pension failures. The problem worse than it seems.