Massachusetts has the highest per capita public debt burden in the nation — and it’s a bill millennials will be saddled with as state pensions continue to climb, fiscal watchdogs say.
The latest pension report provided to the Herald from the state comptroller’s office shows six-figure payouts to retirees are not easing up. Two pensioners topped $300,000 a year in 2019 and 11 others were paid $200,000 or more, records show.
On top of that, more than 1,400 other retired state workers were paid $100,000 or more last year, according to the data, and another 1,100-plus took home $90,000 or more. And all pension payouts are not subject to state taxes.
The costly pensions will continue to be a drag on the budget through 2037, experts warn.
“Millennials will need to address massive debt and these high pensions for years and if the economy turns, they will have to do it quicker,” said Paul Craney, spokesman for the Mass Fiscal Alliance. And, he added, he’s a 38-year-old millennial.
“The pensions are unbelievable. The current crop of leaders on Beacon Hill are just burying their heads in the sand,” Craney added.
Mass Fiscal Alliance and others are also warning that the pension obligation could also harm the state’s credit rating making borrowing for major projects — from fixing the MBTA to improving roads and bridges — more expensive.
“We’re talking about big increases and every year and the cost is expected to go up almost 10% a year,” said Heath Fahle, policy director for the Massachusetts Taxpayers Foundation.
“Health care, local aid, public safety, MBTA and road projects all get squeezed a little by these rapidly growing pension payments,” said Fahle. “Credit rating agencies are noticing.”
Fahle was the author of a report out earlier this week saying Massachusetts could be facing an $880 million budget gap next year due to slowing tax revenue and bills due — including pensions.
That report — titled “First Look: Tough Choices Ahead in Fiscal 2021” — said MassHealth and Chapter 70 state education spending are also big-ticket items that may force lawmakers to cut the budget or raise taxes.
Former state Inspector General Gregg Sullivan, now with the Pioneer Institute, said the state needs to look to other solutions when it comes to pensions.
“The state needs to consider inviting new employees to go on 401(k) programs,” said Sullivan Thursday night. “The state pension system, and that includes teachers, is underfunded by $43 billion. That’s mammoth.
“It’s at a crisis level,” he added, “and we’re just kicking the can down the road and the credit-rating agencies are noticing.”
The 126,000-plus pension payouts studied by the Herald show former provosts, professors, prosecutors, teachers, social workers, toll collectors and prison guards collecting hefty checks. Two former UMass Medical School officials top the list with both pulling down $347,000 and $348,000 a year in pensions. The list goes on from there.
