http://blog.pmaclennan.com/2009/03/17/vallejo-can-void-union-contracts/ Inside commercial hard money lending. Fri, 08 Jan 2010 23:29:45 -0500 http://wordpress.org/?v=2.8.6 hourly 1 http://blog.pmaclennan.com/2009/03/17/vallejo-can-void-union-contracts/comment-page-1/#comment-2013 Jeffrey Hare Wed, 18 Mar 2009 19:34:58 +0000 http://blog.pmaclennan.com/?p=566#comment-2013 Undoubtedly, there will be a groundswell of support from the Unions to appeal this ruling and seek Congressional action to change the law, since the ramifications of this ruling could be so widespread. What is unknown at this point in time is the full extent of the debt that most municipalities face for these largely unfunded and underfunded pension plans, due to weak accounting regulations. In some cities, the amount of debt service for pension plans is equivalent to the budget for their largest department, or to put it another way, cities are paying more for people who don't work there anymore than they are for the ones that do. To the extent that this debt was being serviced by investments, the overall hit on municipal budgets will go up. In terms of total dollars, it will make the AIG bailout seem trivial, but won't make the headlines. Thanks for shedding light on this important issue. Undoubtedly, there will be a groundswell of support from the Unions to appeal this ruling and seek Congressional action to change the law, since the ramifications of this ruling could be so widespread. What is unknown at this point in time is the full extent of the debt that most municipalities face for these largely unfunded and underfunded pension plans, due to weak accounting regulations. In some cities, the amount of debt service for pension plans is equivalent to the budget for their largest department, or to put it another way, cities are paying more for people who don't work there anymore than they are for the ones that do. To the extent that this debt was being serviced by investments, the overall hit on municipal budgets will go up. In terms of total dollars, it will make the AIG bailout seem trivial, but won't make the headlines. Thanks for shedding light on this important issue.

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