States are not alone in racking up massive public pension bills: Cities need hundreds of billions of dollars to make good on their promises of retirement healthcare and income to workers.
The Pew Center on the States surveyed 61 cities — the most populous ones in each of the 50 states, along with those of populations greater than 500,000 — and found a gap of $217 billion for all retiree promises in fiscal 2009. For pensions alone, they were short $99 billion.
“Many cities are facing severe fiscal challenges in their retirement obligations,” said David Draine, senior researcher at Pew. “Fulfilling the retirement obligations cities have already made can have a significant impact on cities’ budgets. Some cities have been forced to move toward either cutting spending on services or increasing taxes.”
Altogether, 74 percent of the cities were able to cover pension obligations, compared with 78 percent for states.
Pew found that 37 cities had pensions with funding levels below 80 percent, the demarcation that many use to determine a system is “underfunded.”