D. Roderick Kiewiet California Institute of Technology June 5, 2012 Institutions in Context: Dictatorship and Democracy University of Tampere

 162,400 government jobs cut in 2011  City of Highland Park, Michigan removed 1000 of its 1200 street lights  Caltech sells $350 million of 100-year taxable bonds at 4.7%  State and local government unfunded pension liabilities increase by 50% last year alone

1. Unfunded liabilities are large and growing rapidly. (  $1.5 trillion) Virtually all OPPEB’s such as medical care, are unfunded. 2. “Stimulus” transfers from the federal government have ended. 3. State and local governments have very little ability to raise additional tax revenue. 4. State and local government pension funds have been increasingly “gambling for redemption” by investing in riskier assets. 5. Many cities now allocate one third of their budget to retirement contributions. By the end of the decade this share will rise to over one half.

6. Public employees’ contributions to their retirement funds are increasing rapidly. 7. State and local governments have reduced their work force and will continue to do so. 8. Debt service currently accounts for half of Nevada’s entire budget and 40% of Michigan’s. 9. Medicaid costs, which already account for more than 20% of state spending will continue to grow much faster than state revenues

 Wagner’s Law  Niskanen’s Law  Demographics  Morgan’s Law  Ledyard’s Law

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