Prichard, Alabama, a town of 27,000 on the outskirts of Mobile, stopped paying pension benefits for retired city employees. Yes, you read correctly. 150 retired, seasoned citizens are no longer receiving their monthly pension checks.
Is this America’s next economic crisis? States and cities are struggling across the nation because of unbalanced budgets, a decline in revenue, and exploding pension and pension-related benefit expenses.
Detroit, MI and Vallejo, CA are the next cities on the bankruptcy horizon. Detroit’s mayor announced a possible halt to garbage pickup services and an 80% decline in police coverage. Have you been to Detroit lately? This can’t be good. Illinois, my home state, is now considering a 60% income tax hike. Some experts estimate that Illinois has 8 – 9 years before pension defaults become a reality.
Years of sustained, fiscal mismanagement can no longer be ignored. Neglecting to manage your expenses will eventually cause circumstances to force your hand. This affects individual households, cities, and state budgets alike. No one is immune. The wise see trouble brewing and make the necessary adjustments.