The Reality Of Southbridge's Pension Commitments

Ken O'Brien

Recent discussions on this site have related to issues confronting Southbridge's finances in the context of real estate taxes.

One area of concern is the town's commitment to financing the long-term costs associated with its retirement obligations to town employees.

This area is frequently overlooked when addressing the town budget. In large part this is a function of the fact that the complexity of the issue is beyond the grasp of many.

As I pointed out in a comment on an earlier post:

 According to the town’s most recent bond offering “The total actuarial liability applicable to the entire system [Southbridge’s retirement plan] at January 1, 2014, was $67,505,108; the unfunded liability of the system was $33,179,035."
In addition other post-employment benefits amounted to $47,599,891 based on the latest actuarial analysis completed July 1, 2013. “As of June 30, 2015, the balance in the OPEB Trust was $513,606.”

Scapegoat Economics

In the wake of the economic crisis of 2008 the United States has repeatedly participated in the blame game with immigrants and with ethnic minorities. Now it is extending domestic scapegoating to still others. Governors in the US now increasingly attack state employees, their unions and pensions as if they, rather than the crisis, had suddenly become the economic problem. Mayors across the country do the same to municipal workers. Of course, both state and municipal budget problems since 2008 are primarily the results of high unemployment and reduced consumer spending. In short, it was and remains the crisis since 2008 that played and plays the key role in cutting governments' tax revenues and hurting government budgets. Growing and more effective tax-evasion strategies of business and the rich have had the same effect. Responding to lowered tax collections, politicians fearful of damage to their careers refuse to raise tax rates. Instead they embrace spending cuts that they justify by means of scapegoat economics.