14 cities at risk via heavy public sector worker pay and benefits include NY City, LA, Chicago, San Francisco, San Jose

"Half of Pittsburgh's tax revenue goes to cover city worker

• pension and healthcare benefits."...

7/13/11, "14 Cities That Are Being Eaten Alive By Public Sector Workers," Business Insider, Grace Wyler

"Although national attention has largely focused on state budget battles like Wisconsin's union showdown and Minnesota's state shutdown, the real spending struggle is

• actually taking place at the local level.

As federal stimulus money runs dry, states are scaling back on municipal aid and revenue sharing. The cuts are adding immense pressure to strained local governments, many of which are already struggling under huge debt burdens. After years of declining tax revenues, cities and towns across the country are now running out of ways to deal with their ballooning budget deficits.

Public employee costs account for a large share of municipal budget woes. While worker compensation accounts for just 30% of state spending, personnel costs tends to eat up between 70% and 80% of local government funds.

Skyrocketing employee costs — the result of overly generous union contracts, an aging workforce, and bad pension investments — are now pushing several municipalities to the brink of fiscal ruin. Without union concessions or substantial reform, these cities will edge closer to insolvency while residents pay higher taxes for deteriorating public services.

Here's a look at 14 cities where the problem is particularly acute.

1. New York City

• Annual pension contributions have skyrocketed from $1.5 billion — 6% of the city budget — in 2002 to an estimated $8.5 billion — 18% of the budget — in 2012. Pension costs ate up more than one-third of all of the city's revenue increases in that period.

• Pension contributions for New York school districts are projected to swell from $900 million to $4.5 billion over the next five years. Property taxes will have to rise an average 3.5% per year to keep up with the payments.

• To cut compensation costs, Mayor Michael Bloomberg has called for state lawmakers to raise the retirement age from 55 to 65 and calculate retirement pay based on an employee's base pay, excluding overtime.

Source: City Journal

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2. Los Angeles

• Worker costs eat up a full 85% of the city's budget. Pension and salary increases are projected to grow to $479 million by 2015.

• Los Angeles faces a nearly $200 million deficit in the 2013 fiscal year. The city closed part of this year's $336 million shortfall with furloughs, cost deferrals and one-time revenue transfers.

• Moody's downgraded Los Angeles' bond rating to Aa3 Tuesday over concerns about the city's rising labor costs. The downgrade affects $3.3 billion in debt, including $378 million scheduled to be sold July 19.

Source: Bloomberg

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3. Chicago

• Employee compensation make up 83% of Chicago's spending. Despite major layoffs, worker costs have risen nearly 10% since 2007 due to cushy union deals that increased wages and benefits for the city's public employees.

• Chicago's unfunded pension obligation is $44.8 billion — nearly eight times the city's annual revenue.

• Mayor Rahm Emanuel has threatened to lay off 600 city workers if unions don't agree to cost-cutting concessions. He has also proposed opening up some city services, like sanitation, to competitive bidding.

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4. San Francisco

• San Francisco faces a budget shortfall of $306 million. The deficit is projected to grow to $829 million by 2016 as the city's operating costs steadily outpace revenue.

• Employee wages and benefits are the largest driver of the budget shortfall, and are expected to grow to $648 million over the next five years.

• San Francisco's pension system, which covers most municipal workers, has an unfunded liability of $4.4 billion, or $35,000 per household. The city also faces $4.3 billion in unfunded retiree healthcare costs.

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5. Pittsburgh

• Half of Pittsburgh's tax revenue goes to cover city worker pension and healthcare benefits.

• Pittsburgh's unfunded pension liabilities total more than $700 million. The city's public pension plans are less than 30% funded, one of the lowest pension funding percentages in the country.

• If the city's public pensions are not 50% funded by September, Pennsylvania will take over the pension systems. The state will likely force Pittsburgh to increase its annual pension payment from $56 million to as much as $120 million, a move that will strain the city's $450 million budget and likely result in major layoffs and service cuts."...

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Followed by North Las Vegas, San Jose, Calif., Providence, RI, New Haven, CT., Newark, NJ, Stockton, Calif., Colorado Springs, Col., Costa Mesa, Calif., Central Falls, RI.





via Lucianne.com