Month: January 2022

How High Will California’s Taxes Go Before There’s No One Left To Tax?

Mary Pat Campbell

Link: https://reason.com/2022/01/11/how-high-will-californias-taxes-go-before-theres-no-one-left-to-tax/

Excerpt:

It’s hard to say which of these is the “worst,” but the 2.3 percent gross receipts tax sticks out. That gross receipts taxes are an awful way to structure a business tax is one of the few things that tax policy experts across the political spectrum almost universally agree on. That’s because they make no allowance for the large variance in profit margins that different types of businesses make—whether a business has a profit margin of 0.1 percent or 10 percent, it would still have to pay the same percentage of its total revenues.

That’s a problem with any gross receipts tax, but California’s proposed tax would exacerbate this inherent problem with a rate that is three times the level of the nation’s current highest. The higher the gross receipts tax rate, the more low-margin businesses that could be put in a position where operating in California would lose them money.

Almost as bad is the proposal to institute a payroll tax on businesses with 50 or more employees. Not only are payroll taxes a regressive tax (even if the tax is imposed on the employer, it would be passed on to employees in the form of lower wages), but the 50-employee threshold would create an obvious disincentive for businesses to hire their 50th employee.

Author(s): JOE BISHOP-HENCHMAN AND ANDREW WILFORD

Publication Date: 11 Jan 2022

Publication Site: Reason

ILLINOIS SPENT 6% MORE THAN IT TOOK IN FOR 15 YEARS, SO COVID-19 HIT IT HARDER

Mary Pat Campbell

Link: https://www.illinoispolicy.org/illinois-spent-6-more-than-it-took-in-for-15-years-so-covid-19-hit-it-harder/

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Excerpt:

From 2005-2019, Illinois revenues totaled just 94% of expenses. The state ran deficits in each of the 15 years prior to the COVID-19 pandemic. Only New Jersey overspent more.

Illinois was one of only eight states to see spending outpace its revenues from 2005-2019, leaving it fiscally ill-prepared to deal with the tumultuous COVID-19 pandemic, according to new data from The Pew Charitable Trusts.

Illinois ranked No. 2 for overspending.

According to the report, Illinois took in just 94.1% of the revenues it needed to cover its expenses from 2005-2019. That number was second worst in the nation, coming in just ahead of similarly troubled New Jersey.

Author(s): Justin Carlson

Publication Date: 12 Jan 2022

Publication Site: Illinois Policy Institute

Milwaukee pension debt clouds Wisconsin’s otherwise positive retirement system picture

Mary Pat Campbell

Link:https://reason.org/commentary/milwaukee-pension-debt-clouds-wisconsins-otherwise-positive-retirement-system-picture/

Excerpt:

According to its most recent actuarial report, the Milwaukee County Employees’ Retirement System (ERS) had a funded ratio of 75.3% and unfunded liabilities of $569 million. The county also has separate retirement plans for mass transit employees and temporary employees, but these plans have relatively small unfunded liabilities.

Milwaukee County ERS’ liabilities grew, in part, because the county did not make its full actuarially determined contributions between 2012 and 2016, according to its most recent Annual Comprehensive Financial Report. During that five-year period, the county’s contributions fell $12 million short of recommended levels.

Since 2015, Milwaukee County’s contributions to ERS have tripled from $19 million to $57 million, as it began to meet and then exceed actuarial recommendations. These contributions exclude debt service the county pays on pension obligation bonds it issued in 2009 and 2013.

Author(s):Marc Joffe

Publication Date:13 Jan 2022

Publication Site: Reason

Joe Biden’s multiemployer pension plan rescue is turning into a political disaster

Mary Pat Campbell

Link: https://www.ft.com/content/2af3b859-3791-4c2e-bbdc-93d23dc4c6a3

Excerpt:

Union-friendly members of Congress and senators, in particular Sherrod Brown of Ohio, pushed the team of President Joe Biden to incorporate a relief plan for federally guaranteed pension plans that would provide (forgivable) 30-year federal loan along with other support.

The cost of the bailout was estimated by the Congressional Budget Office to be about $86bn, of which $82bn would be spent in 2022. If everything worked out, that would have been a good talking point for Democratic candidates during the midterm elections next year, especially in the hotly contested rust-belt states.

But rather than specify the actuarial details of how the rescue would work, the congressional sponsors and the administration left this job to the experts at the Pension Benefit Guaranty Corporation, a US government agency. They may regret that decision.

…..

Even before then, the unions and employers who act as trustees for the multiemployer funds are probably facing legal troubles if they accept bailout money. As the committee went on to point out: “Trustees of such [troubled] plans who decide to take SFA face the risk of litigation from active employees, while those trustees who elect not to seek SFA risk being sued by retirees.”

Author(s): John Dizard

Publication Date: 20 Dec 2021

Publication Site: Financial Times

Chicago school district finds buyers after offering higher yields

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202201141507SM______BNDBUYER_0000017e-59c7-de0b-a77f-dbef44d30001_110.1#new_tab

Excerpt:

Chicago Public Schools’ $872 million of junk-rated paper met with a more fickle high-yield audience this week, underscoring the district?s vulnerability to market volatility even as it inches closer to investment grade status.

At attractive spreads that offered a healthy yield kick with many maturities offering 4% coupons, the bonds were 2.2 times oversubscribed, CPS said in a statement. More than 40 institutional investors placed orders including some in excess of $150 million each.

The district will pay a true interest cost of 3.51% that ranks among the lowest paid by the Chicago Board of Education over the last two decades. The sale provides $500 million of new money for capital projects and the remainder refunds 2011 bonds.

Author(s): Yvette Shields

Publication Date: 14 Jan 2022

Publication Site: Fidelity Fixed Income

Animated Chart: China’s Aging Population (1950-2100)

Mary Pat Campbell

Link: https://www.visualcapitalist.com/cp/chinas-aging-population-problem-1950-2100/

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Excerpt:

The one-child policy defined China’s demographic transition for over three decades.

But to combat an aging population and declining birthrates, the government scrapped the policy for a new two-child policy in 2016. Despite this massive change, China still faces a growing demographic crisis.

The above animated population pyramid from James Eagle looks at the distribution of China’s population by age group since 1950, with projections up to the year 2100.

Author(s): James Eagle

Publication Date: 27 Dec 2021

Publication Site: Visual Capitalist

New analysis shows San Diego’s pension system compares favorably to systems across state, nation

Mary Pat Campbell

Link: https://www.sandiegouniontribune.com/news/politics/story/2022-01-16/new-analysis-shows-san-diegos-pension-system-compares-favorably-to-systems-across-state-nation

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Excerpt:

A new analysis shows the city of San Diego’s pension system is in strong financial shape compared to similar systems across the state and the nation.

While the city’s pension debt is nearly $3 billion, most pension systems face similar gaps between their investment assets and long-term projections of what they will owe employees when those employees eventually retire.

The comparative analysis, which was presented to the city’s pension board Friday, shows that San Diego has been in the top half of the nation’s largest 175 pension systems for “funded ratio” every year since 2013.

And the city’s ratio, which just climbed from 70.2 percent to 74.3 percent thanks to the robust stock market, has been in the top quarter of those national pension systems several times in recent years.

The city’s pension system, formally known as the San Diego City Employees Retirement System, also has among the most conservative policies regarding projections of long-term investment returns.

….

San Diego’s projected rate of long-term investment growth is 6.5 percent, which is at the very low end of the group of 175 pension systems.

Author(s): David Garrick

Publication Date: 16 Jan 2022

Publication Site: San Diego Tribune

Pacific Life Fined for Unlicensed Pension Risk Transfers in New York

Mary Pat Campbell

Link: https://www.ai-cio.com/news/pacific-life-fined-for-unlicensed-pension-risk-transfers-in-new-york/

Excerpt:

Pacific Life Insurance Co. has agreed to pay a $3 million fine after a New York Department of Financial Services (DFS) investigation found that the firm had conducted pension risk transfer (PRT) business in the state without a license.

It is the third enforcement action by the DFS against a major insurance company for unlicensed PRT business. In April 2020, the regulator fined Athene $45 million, and in February it fined AIG $12 million, both for conducting unauthorized pension risk transfer transactions in New York.

Author(s): Michael Katz

Publication Date: 14 Jan 2022

Publication Site: ai-CIO

Marin pension board takes conservative approach on big gains

Mary Pat Campbell

Link:https://www.marinij.com/2022/01/16/marin-pension-board-takes-conservative-approach-on-big-gains/

Excerpt:

Despite a 32% investment return in the last fiscal year, Marin County’s public pension fund is playing it safe.

The board of the Marin County Employees’ Retirement Association decided to factor in the extraordinary gain over four years rather than immediately when assigning annual employer contributions.

The association includes Marin County and eight other public entities. Its net investment return was $829.8 million for the fiscal year that ended June 30.

….

Last year, when the association’s board voted to cut the fund’s assumed annual rate of return from 7% to 6.75%, Block advocated reducing it to 6%. At that time, the association also lowered its assumed annual rate of inflation from 2.75% to 2.5%.

The Cheiron actuaries, however, said the association’s assumptions regarding inflation and the annual rate of return remain valid.

Author(s): Richard Halstead

Publication Date: 16 Jan 2022

Publication Site: Marin Indepedent

Vietnam adds private pension as silver tide rises

Mary Pat Campbell

Link:https://asia.nikkei.com/Economy/Vietnam-adds-private-pension-as-silver-tide-rises

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Excerpt:

When communist Vietnam recently introduced private retirement funds, it was taking a step not only closer to capitalism, but also toward changing a young pension system that some worry may buckle if citizens get old before getting rich.

Last year marked the first time workers could put part of their paychecks into private retirement accounts, on top of the share contributed to the state pension. But analysts say bigger, systemic change is needed to enable retirement for all, even as the International Labor Organization says the state fund is robust. 

….

Retirees would seem to be the envy of the neighborhood, receiving payouts worth 75% of their prior wages — the fifth-highest among 70 countries in the Allianz Global Pension Report 2020.

But Vietnam’s system covers just 40% of the elderly, which explains why women keep working longer there than in all but five other countries, the report shows.

Author(s): LIEN HOANG

Publication Date: 17 Jan 2022

Publication Site: Nikkei Asia

Mortality Nuggets: Videos on Death Numbers, Ranking Table for States’ Mortality for 2020

Mary Pat Campbell

Link:https://marypatcampbell.substack.com/p/mortality-nuggets-videos-on-death

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Excerpt:

The ranking tables do reflect where COVID hit hard in 2020 — the spring 2020 wave in the northeast, and the summer 2020 wave along the south and southwest (Texas, in particular). No, Florida didn’t show its big COVID impact until January 2021, so it’s pretty far down on this ranking table.

This way, we can see if there are any geographic patterns. We did know the hot spots of NY, NJ, IL (mainly around Chicago), DC, TX, Louisiana (around New Orleans), Arizona. I had not been aware of Mississippi being so bad, but maybe that was spillover from New Orleans.

Author(s): Mary Pat Campbell

Publication Date: 15 Jan 2022

Publication Site: STUMP at substack

Comptroller Mendoza claims Illinois paying its bills but needs more federal bailout to avoid a big one – Wirepoints Quickpoint

Mary Pat Campbell

Link: https://wirepoints.org/comptroller-mendoza-claims-illinois-paying-its-bills-but-needs-more-federal-bailout-to-avoid-a-big-one-wirepoints-quickpoint/

Excerpt:

As for Mendoza’s claim that Illinois is paying its bill, that’s simply not true. The state entirely ignored the hole in its unemployment fund in its current budget and future budget forecasts. In reality, the state will not just have to repay the loan but must also restore the fund to a sound balance, which will probably take another $1.5 billion at least, which was the balance before the pandemic. Nor does Illinois pay its full bill for the 800-pound gorilla, pensions. Year after year it contributes far less to its pension funds than actuaries say is required to prevent unfunded liabilities from growing.

Mendoza supported her claim that Illinois is paying its bills by saying, as she frequently does, that Illinois shrunk its bill backlog by about 80% since its historic high of $16.7 billion during the 2015-2017 budget impasse.

Author(s): Mark Glennon

Publication Date: 3 Jan 2022

Publication Site: Wirepoints