RSS Feed
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
|
State's tax structure can't keep up with state retirees Unless Alabama is able to produce serious, additional revenue sources and meet its past obligations, it will be extremely difficult for Alabama to continue the almost unbelievable progress it has made over the last 15 years. Currently, Alabama's tax structure is closely tied to the economy. If the economy slows, so do state revenues. Unlike most states, Alabama does not rely on property taxes as a traditional method of funding state government. When Alabama and every other state that funds health care benefits were told a few years ago they needed to fund their health insurance programs like their pension programs, it was shocking news. Instead of a pay-as-you-go basis for health care benefits, Alabama must report an unfunded liability of approximately $17 to $20 billion. As I have said in the past, to make progress against this liability the state needs a new source of revenue dedicated to this liability. Members also need to contribute more, while new benefits must be limited. A recent AEA survey asked its members if they would be willing to contribute more - most said no. A small percentage responded that they would contribute $10 a month for one year, which in reality would not help much because the current state allocation is $775 per month. The accompanying table reveals the growth in monthly retirement payroll and number of retirees from September 1987 to September 2007. As expected, most retirees strongly feel they deserve to have their Cost-of-Living Adjustments (COLAs) continued. The problem is that each one is vastly more expensive than in years past because of the growth in retirees. Just as the state needs a large influx of new money for health insurance, Alabama would need another new stream of revenue to pay for new COLAs. While these two problems alone are big enough to start a taxpayer rebellion, the state's General Fund, which includes Medicaid, Public Safety, Corrections, Public Health, etc., is also in dire shape. Furthermore, our highways have fallen from some of the best in the country to needing millions in maintenance, and because of our growth there is a need for new roads. I believe that when the State Legislature meets in a couple of months, it will be a difficult session. Due to the size of these problems, I strongly urge everyone to think about and discuss ways of solving these issues. This way Alabama can continue the great progress it has made over the last 15 years. Why Proper Funding is Critical RSA Monthly Retirement
Dr. David G. Bronner is chief executive officer of
the Retirement Systems of Alabama.. This
appeared in a recent RSA newsletter.
|
for larger version       |
||||||||||||||||||||||||||||||||||||||||
