Wednesday, July 31, 2013

We're #2! ... On a list of cities likely to follow Detroit

Looky here ... Portland is the second city on a list of cities that could follow Detroit down the path to BK City.

From the article:
One has to wonder if Portland might deliberately drive itself into bankruptcy as part of a larger plan to become the hipster capital of the world.

Regardless, the largest city in Oregon is well on its way to financial trouble. Moody's is reviewing the city's credit rating for its general obligation bonds, but also for Portland's tax obligation bonds, housing bonds and redevelopment bonds. The city has more than $453 million in unfunded pension debt.

Pew notes Portland "had virtually no asset" to offset unfunded liabilities of $2.3 billion in fiscal 2009 for its pension and disability plan for police and firefighters. The city is essentially paying for the retirement costs of those uniformed employees on a pay-as-you-go basis, which any actuary can tell you is a terrible idea.

The article does get on thing wrong, but that's not necessarily good news.

You see, Portland's police and firefighter pensions aren't really all that unfunded. That's because our property taxes will continue to rise to meet whatever costs the pension system throw at us.

I bet you're asking, "What about those property tax limitations?"

Nope. Portland's police and firefighter pensions are exempt.

So, the good news is that Portland probably won't go bankrupt on police and firefighter pensions. The bad news is that we'll keep seeing increasing property taxes, without increasing services.