These soon to be taxpayer liabilities are connected to the already existing $1 trillion in pension shortfalls state & local governments have
and will become an economic force to be reckoned with.
The new found debt, by rational accounting terms, is related to healthcare liabilities promised retirees that never had to be made public. The GASB, Government Accountability Standards Board, told these government entities they must account for these starting in 2018.
Here’s more from Forbes.com:
All over the U.S., states, cities, school districts and other governmental entities have promised their workers generous retirement benefits, but haven’t set aside enough cash to pay what they will owe.
Governments currently disclose their retiree healthcare liabilities only in footnotes to their financial statements. Many have saved little to no money to cover those future expenses.
That’s about to change.
Starting in 2018, the Governmental Accounting Standards Board—the source of generally accepted accounting principles (GAAP) for state and local governments—will force officials to record healthcare liabilities on their balance sheets. Pew Charitable Trusts estimates the national shortfall will add up to $645 billion.
That’s on top of the estimated $1.1 trillion in unfunded pension liabilities they already had. In other words, this giant problem that no one knows how to solve is about to get 59% worse!
Or, more accurately, it’s going to look 59% worse. The healthcare shortfall isn’t new. What’s new is that local governments have to stop obscuring it.