Who Pays?

Many states seem to be in dire straits. Relative to its revenues, Ohio faces the largest burden. It would need to devote over eight years of tax revenue solely to retirement funding to cover already-acquired pension liabilities. Colorado, Rhode Island, and Illinois are close behind. “Vermont, the least underfunded as a percent of total tax revenue, would still need over twenty months of tax revenue to make up for its pension fund shortfall.” -- Kellogg School Finance Professor Joshua Rauh

Mr. Rauh and a colleague from the University of Chicago estimated that unfunded pension liabilities of the 50 states of the United States totaled $3.2 trillion. Give or take. Mr. Rauh (and a colleague from the University of Rochester) further calculate that municipal liabilities across the United States total nearly $575 billion. Give or take.