And we thought federal deficit spending was bad enough for adding to our children’s debt.

A new report from the Heartland Institute sounds a dire warning about the massive unfunded liability of state and local government pension plans.  By one estimate, “the unfunded collective burden of these pensions at between $750 billion and $1.75 trillion.”  Others believe taxpayers are on the hook for more than $3 trillion according to The State Public Pension Crisis: A 50-State Report Card.

What was a problem before the current economic downturn is now a full-fledged crisis because of overly generous benefits that require “governments [to] spend nearly five times more on pensions than their private-sector counterparts.”

It’s hard not to gasp at some of the examples.  Take California:

[W]here the state’s annual pension fund contribution has jumped from $321 million in 2000–01 to $7.3 billion in 2008-09. According to public databases, more than 5,000 retired California government workers receive annual pension benefits exceeding $100,000.9 And with pension benefits pegged to ever-rising salaries, future retirees can expect to receive far more than today’s retirees.

Ten California retirees currently receive more than $220,000 a year in pension benefits. Topping the list is Bruce Malkenhorst, who retired in 2006 after a 27-year run as Vernon city administrator. He receives $41,639 a month – $499,674 this year.  Not bad for having run a town of just 92 people that has no school, park, library, or grocery store. This “city” near Los Angeles is made up almost entirely of industrial properties.

Or New York City, where the enormous amount spent on pensions caused Mayor Michael Bloomberg to warn that core services will be compromised:

New York City is spending so much money on pensions – $6.3 billion, a 10-fold increase from the $695 million we spent in 2000 – that we have far less to spend on core services, such as public safety, education, parks, and senior centers. That defies common sense, and it’s hurting our city. For instance, the city now has to spend more money on pensions and fringe benefits for firefighters than we pay in salaries for firefighters.

New York and California are not alone. Heartland uses six variables including “employee contribution, choice of retirement plan, taxable benefits, time before vesting, earnings basis for pensions, and fund solvency” to compare, score and rank each state.  Eight states received an A while ten states received an F, including MAD’s home state of Colorado.  Our colleagues at the Colorado Spending Transparency Project have reported on the financial crisis facing Colorado’s PERA (Public Employee Retirement Association).

Bottom line according to Heartland:

Public-sector employee pensions have become too expensive, too cumbersome, and too burdensome for taxpayers. Massive unfunded liabilities are now devouring rapidly growing parts of state and local governments, causing spending to be cut on essential services. Current policies are financially unsustainable in many states.

Read The State Public Pension Crisis to find out how your state ranks.