KeNo's Housing and Economic Portal: Saturday March 12 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

California Panel Calls for Cuts to Government Workers’ Pensions - (www.bloomberg.com) Government pension costs are no longer sustainable, the independent Little Hoover Commission said yesterday. It called on lawmakers and Democratic Governor Jerry Brown to hold benefitsat current levels and recalculate yet-to-be-earned payments under a new hybrid that includes elements of a traditional pension plan and a 401(k) account where beneficiaries bear the investment risk. The rising cost and underfunding of public employee pensions has sparked a national debate, most recently in Wisconsin where Republican Governor Scott Walker has asked the Legislature to boost contributions from state workers. California’s 10 largest public pension funds were short a combined $240 billion in 2010, the commission found. “California’s pension plans are dangerously underfunded, the result of overly generous benefit promises, wishful thinking and an unwillingness to plan prudently,” commission President Daniel Hancock said in a letter to lawmakers and Brown yesterday. “Unless aggressive reforms are implemented now, the problem will get far worse, forcing counties and cities to severely reduce services and lay off employees to meet pension obligations.”

Obama has few options to aid strapped states - (www.washingtonpost.com) The budget crisis facing many states is threatening to undermine key elements of President Obama's agenda, but with Republicans in control of the House and widespread concern over the federal deficit, he has few options to make a significant difference. Even those who say Obama needs to secure significant new federal spending to help states avoid cutting health care and education programs and laying off workers acknowledge the limits. "We know there is not a great appetite for major new funding, but there is a real short-term crisis here," said Charles Loveless, the legislative director of a powerful labor union, the American Federation of State, County and Municipal Employees. Eventually, Obama could also come under pressure from state officials and the financial industry to provide emergency aid to states and municipalities if they can't pay off their debts.

True Finns Threaten Debt Bailout Plan as April Election Nears: Euro Credit - (www.bloomberg.com) Finnish voters may prove as great a threat to the euro region’s retooled bailout plan as German taxpayers. Support for the anti-euro True Finns party has soared as an April 17 election nears. It’s the fastest-growing movement in the northernmost euro member, with opinion-poll backing to rival the nation’s biggest opposition party. Voters are rallying to its argument that Europe shouldn’t have rescued Greece or Ireland, and Finland should veto more cash for the bailout fund. “How come they can’t see the euro doesn’t work?” Timo Soini, leader of the True Finns, said in a Feb. 24 phone interview. “If a melon and an apple each wear the same size baseball cap, everyone can see that just doesn’t work.” The party’s success comes as opposition mounts among Europe’s AAA rated nations to a revamp of aid packages, to be debated at a March 24-25 summit prior to seeking approval from the 17 euro-area parliaments. Portugal’s 10-year yield has climbed to 7.58 percent from 6.93 percent at the start of the month as investors fret that the rescue mechanism won’t be big enough, last long enough or would charge recipients too much.

Pensions at Risk, States Consider Plans Like 401(k) - (www.nytimes.com) Lawmakers and governors in many states, faced with huge shortfalls in employee pension funds, are turning to a strategy that a lot of private companies adopted years ago: moving workers away from guaranteed pension plans and toward 401(k)-type retirement savings plans. The efforts come as the governors of Wisconsin and Ohio, citing dire budget problems, are engaged in bitter showdowns with public-employee unions over wages, pensions and collective bargaining rights. The new plans allow states to set a firm, upfront limit on the amount they will contribute and leave it up to the employee and the financial markets to make the money grow. In a traditional pension system, the employer promises a certain benefit, then must find a way to pay for it. Like private employers, which in droves have terminated traditional pension plans, many government officials like the idea of shifting much of a pension plan’s risk to the worker. And some workers prefer a 401(k)-type system because it gives them more control over their retirement assets, including the ability to take the money with them when they change jobs.

Christie Spurs U.S. Governors to Adopt Confrontational Statehouse Politics - (www.bloomberg.com) Barely 400 days into a tenure that began with his squeaking into office with 49 percent of the vote, New Jersey Governor Chris Christie is emboldening other Republican chief executives to challenge the compact between governments and their workers. The 48-year-old former U.S. attorney once was a singular voice of pugnacity. Now the Christie style is gaining disciples. Wisconsin, Indiana and Ohio have seen protests as Republican governors take on public-sector unions for cutbacks or restrictions on collective bargaining. They chose the same target at which Christie took aim last year. “I’ve never been a wallflower,” Christie told reporters Feb. 26 at the National Governors Association winter meeting in Washington. “I talk about the things I want to talk about.”