ON-Lion Letter
The total national price tag of promises of pension and health-care payments made to retired state and local government workers, when combined with debt, represents $3.5 trillion in IOUs that will be passed on to future taxpayers, according to a January 2007 report released by the Wisconsin Policy Research Institute (WPRI) in Thiensville, Wis.  The Lynde and Harry Bradley Foundation in Milwaukee provides substantial support to WPRI.

"That's right, trillions, the denomination usually reserved for federal spending," notes WPRI president Jim Miller in his introduction to the report, The Mounting Cost of Deferred Responsibility in Government:  The Future Impact in Wisconsin.

These IOUs consist of $1.85 trillion in debt, $0.34 trillion in unfunded pension liability, and $1.40 trillion in unfunded retiree health care, finds the study, by WPRI senior fellow George Lightbourn.

By WPRI Senior Fellow George Lightbourn, it details how a mandate from the Government Accounting Standards Board will soon require state and local governments to report their real budget shortfalls.  Lightbourn's study estimates the unfunded amount owed by local governments in Wisconsin could add up to $13.8 billion.  The state government will have to spend $3.6 billion to retire its unfunded liability for pension and retiree health care.
"The IOUs will be particularly troublesome for Wisconsin public schools," according to Lightbourn.  "Since the mid-1990s, school spending increases have been capped, so the repayment of IOUs for employee retirement benefits will directly affect classroom support.  Either school boards across the state will cut staff or they will turn to the taxpayers via referenda to pay for their deferred responsibility."

In general, given the proclivity of state and local government leaders to spend and promise to spend more, "taxpayers should be prepared for the worst," he warns.
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