Posts Tagged "property tax revenue"
July 12, 2022
Public-Sector Pensions Weathered Pandemic
The economic turmoil in the early months of the pandemic – a plunging stock market and soaring unemployment – posed a real threat to state and local government pension funds and the workers who rely on them.
One group was particularly vulnerable: public-sector workers who aren’t covered by Social Security and lack the backstop of the federal government if their employer pension plans get into trouble.
The Center for Retirement Research has some good news for these 5 million noncovered workers living in 20 states. Their pension plans got through the first two years of the pandemic unscathed.
In dollar terms, government contributions to these defined benefit pension plans actually increased during COVID. That and a roaring stock market in 2021 significantly improved their financial condition. Of course, this sunny report is clouded by what is happening to the stock market now – it has reversed course and dropped 20 percent this year.
But the researchers’ assessment is that COVID was not the financial disaster many had feared for the public-sector workers who aren’t covered by Social Security.
The 59 noncovered plans in the study vary in size from small local pension plans like the Pittsburgh Police Relief and Pension Fund to the nation’s largest state plan, the California Public Employees Retirement System.
Congress’ financial support during COVID played an important role in stabilizing state and local governments’ finances. They received hundreds of billions in pandemic relief from the CARES Act in March 2020 and, a year later, the American Rescue Plan. The federal relief checks to families and businesses also added billions to state and local tax bases. Importantly, tax revenues snapped back after a brief drop in 2020, because high-income workers, who pay more in taxes, didn’t suffer the dramatic layoffs experienced by low-income workers.
The federal support provided the fiscal breathing room for governments to make their pension contributions on schedule. In fact, some of the states with the most poorly funded plans – namely New Jersey and Connecticut – took advantage of the fiscal windfall to make historically large contributions in 2022. …Learn More