Bacon's Rebellion

Democracy Thrives in Sunlight

Bacon Bits: Film Flam, State Workers, Fun & Games with Chicago Debt

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by

James A. Bacon
in ,

Yummmm. So tasty.

Film incentives a money loser for state. Incentives for producing films in Virginia doubled under the McAuliffe administration, reaching $14.3 million in 2015-2016 and totaling $43 million over five fiscal years. But Virginia’s film industry has returned about 20 cents for every dollar it received in tax credits and 30 cents for every dollar in grants over the five-year study period, according to testimony yesterday before the Joint Legislative Audit and Review Commission (JLARC). Legislative auditors concluded that 95% of the productions would not have been filmed in the state were it not for the credits, reports the Richmond Times-Dispatch.

State employment compensation needs reform. Compensation for the state’s 105,000 employees is “nearly equivalent in value” to that of private-sector employees in Virginia. Although salaries lag the private sector by about 10%, the state makes up the difference with generous health insurance policies. The compensation package does have challenges, however, hiring employees in the fields of health care, health and safety inspection, public safety, and information technology, finds a new JLARC report. “State employee salaries could be more strategically managed if they were … prioritized for jobs that exhibit the most pressing workforce challenges.”

Boomergeddon watch: Chicago. Despite $36 billion in public pension debt, a prospect of $550 million in budget deficits over the next three years, and a reliance upon the state of Illinois, the budget of which also is in a shambles, Chicago just issued a AAA-rated bond. How is this possible? Chalk it up to creative financial engineering. The city is selling off its right to receive sales-tax revenue from Illinois to a separate public corporation, which will issue new bonds backed by those funds. This securitization insulates bondholders from the city’s finances. Chicago is using the proceeds to pay off old, higher-coupon paper, so it will ease its interest burden for a while. However, writes financial blogger John Rubino, “since [the city] runs a chronic deficit, it will soon be back in the market to borrow more, at which point it will have to pay up – since those AAA bonds are siphoning off so much money. Then the downward spiral will resume, with no more tricks available to delay the inevitable.”

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3 responses to “Bacon Bits: Film Flam, State Workers, Fun & Games with Chicago Debt”

  1. TooManyTaxes Avatar
    TooManyTaxes

    This is all chicken feed. CALPERS has an unfunded pension liability of $153 Billion. Yes, that’s billions.

    We need to shut down programs that don’t perform. Public sector pensions need to be turned into defined contribution plans, perhaps, with a small defined benefit component. Private foundations should be taxed.

  2. LarrytheG Avatar
    LarrytheG

    For those critics who keep blathering about Social security and ponzi schemes.. and laud the idea of defined benefit and defined contributions , IRAs and 401Ks… etc.. -pay attention.

    More than 5000 companies – have failed to pay the pensions of their workers and the Federal Govt has had to step to help with the PBGC.

    The problem of “unfunded liabilities” is widespread and extends not only to States but to local county and city and school jurisdictions because GAPP accounting standards instituted a couple years back – actually require Counties to report how much money they owe their retirees not only for pensions but for their health insurance and prior they did not.

    http://gasb.org/cs/ContentServer?c=GASBContent_C&pagename=GASB%2FGASBContent_C%2FGASBNewsPage&cid=1176166141859

    There are issues… with the phrase “fully funded”.

    what does that mean ? Does it mean in next years budget they have set aside enough money to pay for pensions and health care for their retirees?

    Or does it mean they have set aside enough to pay for that for more than one year and so the “liability” is what they owe – for the actuarial life of the retiree?

    The Federal Govt, BTW , transitioned to a defined contribution pension in the 1980’s … a 3-legged approach – social security, a small defined benefit and the defined contribution .. and one for one match up to some threshold and then the worker could contribute more –

    Finally – it’s not that Chicago has problems or Calpers… it’s how many out of all the jurisdictions have problems? Is it horrendously widespread and a real Boomergeddon “threat” or is it selectively looking at a small percent that IS truly awful – and really not Boomergeddon?

  3. V N Avatar
    V N

    The better ones are 27% lower salaries. People are not going to care about the other until they need it. Too many use the catastrophic care coverage.
    On top of that, one way the govt. gets around it is by hiring green card or the like Visa workers. They’ll take the pay. Get the HR’s to divulge patterns of it in govt. and you’ll find that is what happening. They are the ones saving the public $$$$.

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