Dallas is quietly going bankrupt over the city’s pension plan funding for its police officers and firefighters.
Dallas city Mayor Mike Rawlings warned in early November that the financial burden stemming from these pension plans could soon be too much for taxpayers to handle, Fox reports.
The $2.93 billion fund set aside for city police and firemen pensions is expected to become insolvent by 2028, resulting from retirees making a run on the fund. Dallas retirees, set off by rumors the city would cap withdrawal amounts on their pension plans, withdrew $220 million from the system in the past six weeks alone, a rate of $20 million a week, the New York Times reports.
The Dallas Police and Fire Pension System asked for $1.1 billion in October to keep the system solvent, a figure roughly the size of the entire 2016-17 Fiscal Year proposed General Fund budget for the City of Dallas. A city’s general fund is supposed to be spent specifically on police, public works, and parks and recreation.
If the city provided this year’s general funds to the pension system, it would drain the system of funds for: alleviating poverty in South Dallas, creating city parks and libraries to foster community engagement, and giving current government workers’ raises.
Rating agency Moody’s reported that Dallas faced a greater pension debt load than any other major U.S. city besides Chicago.
While the city’s police force gained both local and national acclaim after they stopped an insane sniper who opened fire on protesters in downtown Dallas in July, many Dallasites are concerned about the solvency issues and overall economic health problems this pension system poses for the future.
Dallas is just one example, albeit an extreme one, of what is happening in cities across the U.S. The city has been a particularly bad example because its plan allows some retirees to withdraw large sums.
Cities like Detroit, Philadelphia, Chicago, and many others find themselves in the midst of a similar problem. Local politicians promise workers enticing, lucrative pension plans, often backed with public funds, with little foresight into their long-run viability.
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