state budgets

State, City Government Job Losses Estimated 400,000-900,000 Due to Budget Shortfalls

Moody's has estimated 400,000 jobs from State, City and Local governments will be lost next year due to budget cuts.

Up to 400,000 workers could lose jobs in the next year as states, counties and cities grapple with lower revenue and less federal funding, says Mark Zandi, chief economist for Moody's

The Center for Budget and Priorities has the estimate much worse, a total of 900,000 jobs affected.

it will slow the economic recovery and raise the risk that the nation will fall back into recession as the loss of Americans’ spending power ripples through the economy. States’ actions to close their $140 billion gap without more federal aid could cost the economy up to 900,000 public- and private-sector jobs.

More estimates:

Wells Fargo economist Mark Vitner expects state and local governments to cut about 200,000 workers this year if Medicaid benefits aren't extended. That's largely why Wells Fargo cut forecasts for third-quarter economic growth to 1.5% from 1.9%.

Even if Congress extends Medicaid subsidies, Zandi expects 325,000 job cuts the next year, though Vitner says losses could be far less.

Public Pension Funds $2 Trillion Short

This is quite a story, Public Pension Funds $2 trillion short and it's due in part to accounting, according to Orin Krama, chair of the New Jersey Investment council.

The accounting treatment of public retirement plans is the political leper colony of government accounting. It is a no-go zone

It's also due to poor returns and because the accounting results in overestimating returns. It seems pension funds use an 8% rate of return for future estimates and even if that number was used, Krama says funds are still $1 trillion short.