Well then. I guess corporations are not the only group having trouble with retiree benefits."Taxpayers will soon get a surprise bill that could exceed $1 trillion for the cost of paying future medical benefits for state and local workers who retire.
Retiree medical costs are the biggest long-term challenge that state and local governments face. By comparison, state and local pensions have an unfunded liability of about $500 billion.
State and local governments have set aside $2.5 trillion to help pay pension benefits for 19 million civil servants and 7 million retirees. But they have set aside almost nothing to pay for retiree medical benefits. (Emphasis is mine. How can this be???)
"Taxpayers will revolt when they realize the enormous cost of this," Minnesota State Auditor Pat Anderson says. She says the financial burdens on local governments will be so great they will put pressure on the federal government to nationalize health care, which she opposes.
New accounting rules require that governments, starting next year, put a price tag on the value of medical benefits promised to civil servants when they retire. New York City's liability, for example, approaches $50 billion. The city's total budget last year was $53 billion.