Every American is fixated on the current coronavirus pandemic. It dominates local and national news, daily talk radio and Alabama’s major newspapers three days a week.
The Alabama political press is busy using this to accuse Governor Kay Ivey of wanting Alabamians to die because she hasn’t issued a “shelter-in-place” order. To their credit, usually, it’s Alabama’s budget cuts, low taxes, taxes on food, failure to expand Medicaid or abortion bans that are being used as an implement of murder by their target of the day, so give them credit for creativity.
If we as a state look past this healthcare issue and look at the damage it is already doing to the state’s economy, we will see a bunch of major issues on the horizon.
When State Senator Arthur Orr (R-Decatur) appeared on WVNN Friday morning, he talked about budgeting issues that will definitely be of major concern when the state is back open for business and the legislature resumes its budgeting process.
Orr, who has chaired both the General Fund and Education Trust Fund committees, said that the next legislative session will be a hard one with hard fiscal choices.
Planned pay raises for teachers and other state employees are gone. Orr noted that the budgets that are passed will be “level-funding” — or close to it — and hard choices will have to be made.
But that “pain” may be short-term, not that the reverberation of the coronavirus pandemic won’t last for years. There could be long-term issues as well.
The Retirement System of Alabama has long been a hot-button in this state.
Orr sounded the alarm on the viability of the system, saying, “The RSA is among, if not the most, highly exposed defined benefit, public defined benefit plan in the country to equities or to the stock market.”
He noted, “When the stock market has tanked 30 plus percent, RSA feels a much larger hit than other retirement funds. It’s going to be a concern.”
My takeaway:
With a defined benefit payout and few opportunities to increase revenue. the actuarial tables will take a beating as the stock market slides.
Most expect the market to rebound eventually, but Orr has been talking about the RSA’s vulnerabilities for years. And this will not help.
Even if you aren’t a beneficiary of the Retirement System of Alabama, you will still feel the impact if its finances continue to head south. Orr warned of a stark reality where “taxpayers will be ending up having to pay more for retirement for all the government employees.”
Obviously, no one is thinking about this right now, but we will be revisiting this in the very near future and the impact of this could go on for a very long time.
Listen:
Dale Jackson is a contributing writer to Yellowhammer News and hosts a talk show from 7-11 am weekdays on WVNN.
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