It's nice to know Indiana is better managed fiscally than most states. But we don't shine in every category. When it comes to how well our state pensions are funded, we are in the bottom 10 of all states, funded at just 63 percent.
According to 2009 data from Boston College's public plans database (which contains the most recent data available), state public-employee pension programs are underfunded by a total of $708 billion. (Numbers from the Pew Center on the States are slightly different, as they're based on 2008 data; they estimate that the U.S. state pension system is underfunded by $452 billion.)
Only New York and Wisconsin have fully funded plans. Delaware, North Carolina, Washington, South Dakota and Tennessee are at 90 percent or above. The worst states are West Virginia (50 percent), Oklahoma (55), Illinois (58) and New Hampshire (58).
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Mitch Daniels likes to brag about balanced budgets, but the truth is Indiana does not have one. We sweep the billions borrowed to fund the unemployment program, we have sweeping property tax reform that hands over all per 1977 police, fire and teacher pension liabilities to the state and then lease a toll road for 70 years while planning to spend the proceeds over 30 years.
Many laugh at IL for raising their state income tax, but we should be ringing our representatives necks for pulling a Madoff ponzi on us.
But IS Indiana better managed fiscally than most states?
Cheaper doesn't necessarily mean better. When I replaced our refrigerator, I spent 20% more than I had to, in order to get an energy-efficient model. Three years later, the more expensive refrigerator has more than paid for itself.
Similarly, Indiana seems to think that you attract business by cutting taxes. The problem is that most new jobs are created by new small businesses, and they generally aren't paying much in taxes anyway. If you want to get someone to start a new factory, you best offer a community where the founder's wife wants to live.
OK, that's a blatantly sexist statement. Women start many new businesses these days. On the other hand, women generally still decide where the family lives. Lincoln didn't move to Philadelphia because of taxes; the taxes are lower in Fort Wayne. They moved to Philly because of the social life available there.
When times are tough, the companies that do best are the ones offering the best quality regardless of price, because their customers can still afford the best, and the ones offering the best price regardless of quality, because mid-range customers move downscale. You can build a solid economic climate based on being a trailer park, or on being Forest Park Boulevard.
The Lancaster, PA MSA has a local unemployment rate of 7.3%, compared to the Fort Wayne MSA's rate of 10.2%. Taxes are higher here, but I used to spend 1 day a year trying to lower my taxes and 40 hours a week trying to raise my taxable income; you can't penny-pinch your way to a better life. You need to build communities where successful people want to live.
Yes, u can't penny pinch your way to a better life.